Iran, UAE Sign CNG Deal

Iran, UAE Sign CNG Deal Iran, UAE Sign CNG Deal

A preliminary agreement has been signed between Iran and the UAE for export of compressed natural gas (CNG) to the Arab country, said deputy managing director of the National Iranian Oil Refining & Distribution Company (NIORDC), Mehr news agency reported.

Natural gas is expected to be exported via CNG tankers instead of pipelines, Mansour Riahi said, adding that CNG consignments will be compressed in southeastern city of Assalouyeh, and then will be shipped in 40-feet containers.

Private Iranian firms have taken necessary measures to obtain relevant licenses for the export of CNG to the UAE, Riahi added, noting that Iran enjoys one of the world's most extensive CNG production, distribution, and supply networks. More than 2270 CNG stations are now operating across Iran, with another 185 under construction.

Negotiations were also held with Kuwait, UAE, and Oman regarding gas exports from Iran to the Persian Gulf states on account of an increase in domestic gas production capacity of 100 million cubic meter per day (mcmd) in the last Iranian calendar year (ended March 20), and a further 100 mcmd increase expected to be fulfilled this year.

The National Iranian Oil Company (NIOC) and Crescent Petroleum, a privately owned oil and gas company headquartered in the UAE, 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 over 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."