Business | Oil & Gas

Crescent should pay higher price for gas, says Iran

Iran will find other customers for gas assigned to a deal being negotiated with Crescent Petroleum or use the fuel itself if the UAE firm does not agree to pay a higher price, Iran's oil minister said yesterday.

  • Reuters
  • Published: 00:05 September 17, 2007
  • Gulf News

Tehran: Iran will find other customers for gas assigned to a deal being negotiated with Crescent Petroleum or use the fuel itself if the UAE firm does not agree to pay a higher price, Iran's oil minister said yesterday.

Iran and Crescent, a shareholder in the UAE energy firm Dana Gas, have been locked in tortuous negotiations over pricing the gas for export, since it was signed in 2001.

The deal has become politically contentious in Iran, with many prominent politicians saying Iran will lose out because gas prices have risen sharply since the contract was agreed.

"Until the price is corrected, we are not going to sell them [Crescent] natural gas," Gulam Hussain Nozari told a news conference.

Main reason

The project involves supplying gas from Iran's Salman field in the Gulf to Crescent, which owns a separate company along with Dana Gas for the purpose of importing the fuel from Iran.

"If we do not succeed in correcting the price, we have other customers from emirates and also Oman for the gas," Gulam Hussain Nozari said.

"Also using the gas inside Iran is an option," he added.

Oman and Kuwait are among Gulf Arab states seeking natural gas supplies from Iran, which holds the second-biggest natural gas reserves in the world after Russia.

But the Islamic state has been slow to develop its reserves for export.

Dana Gas officials have said pricing was not the main reason for the project's delay, arguing that it was due to an offshore gas production platform that should have been finished in September 2005 by Iran but which was still being built.

Dana Gas was set up to deliver gas to utilities and industrial users in the UAE. With the Iran gas deal delayed, the company has virtually no operating income.

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