Meetings Underway to Revive UAE Gas Deal

Meetings Underway to Revive UAE Gas DealMeetings Underway to Revive UAE Gas Deal

Negotiations have started with UAE’s Crescent Petroleum to revive a major gas export deal that ran into troubled waters in 2005, Fars news agency reported.

An official from the National Iranian Gas Company (NIGC) was quoted as saying that discussions are currently underway with Crescent Petroleum to change the terms of the contract.

The unnamed official told Fars that Iran has already started planning for the exports of natural gas to the UAE. The report said the key topics in fresh negotiations with Crescent Petroleum are the same as those included in the previous deal.

The report added that no new deal will be signed and that officials in Iran’s oil industry are working on how to implement the deal.

“However, no specific conclusion has been reached and it is still not clear when gas exports to the UAE will start,” the report added quoting unnamed NIGC officials.

The National Iranian Oil Company (NIOC) and Crescent signed a 25-year deal in 2001 for the export of gas of 17 million cubic meters of gas per day from Iran’s Salman field in the Persian Gulf to the UAE. However, the deal was suspended and became a subject of controversy in 2005.

At the heart of the issue – that is still mentioned by the media and officials as the Crescent controversy – was the gas pricing formula. Critics of the deal maintained that the price agreed on in the contract was 14 times below the market price.

Crescent Petroleum eventually sought an international arbitration through The Hague over its dispute with NIOC in 2009 and it said in 2014 that it had won the case.

The company said an international tribunal had determined that “the 25-year contract between it and NIOC is valid and binding upon the parties, and that NIOC has been obligated to deliver gas under the contract since December 2005."

The NIGC official said that Crescent is trying to receive gas from Iran based on the ruling by The Hague. “However, the Iranian side wants to negotiate over this and arrive at a win-win result,” the official said.  “This is because Iran’s objective is to export gas and obtain revenues.”