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Crescent officials in Iran to continue gas pricing talks
Source: BI-ME and agencies , Author: BI-ME staff
Posted: Thu January 31, 2008 12:00 am

IRAN. Officials of the UAE's private energy firm Crescent Petroleum arrived in Tehran this week to continue long-running talks over pricing Iran's gas supplies across the Strait of Hormuz, to fuel the booming industrial projects in the Emirates.
 
The Crescent team which arrived on Sunday comprised the company's Executive Director and a number of negotiation experts.

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

Crescent had expected first gas deliveries by mid-2006 but the deal ran into delays after a number of prominent politicians in Iran said the country would lose out because gas prices had risen sharply since the initial contract was signed.

After a report by Iran's State Audit warned that the contract contained serious problems, Islamic Republic officials intensified efforts to put off the contract.

According to the report, if the contract was put into effect, Iran would have to sustain a sum of US$44 billion of loss in 25 years. Subsequently, Crescent voiced preparedness to revise the contract in September 2006.

Iran has said it would not export gas to the UAE until it secures a fair price.

"Until the price is corrected, we are not going to sell them [Crescent] natural gas," Iran's Oil Minister Gholam Hossein Nozari announced earlier.

The project involves supplying gas from Iran's Salman field in the Persian 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," Nozari said.

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

Oman and Kuwait are among the Gulf Arab states seeking natural gas supplies from Iran, which holds the second-biggest natural gas reserves in the world after Russia. The UAE needs the gas to meet rapidly rising domestic demand from power and industrial plants, some of which have been forced to utilise other fuels such as coal and heavy oil as a stop-gap.

An Iranian official said last month construction of Iran's side of the project was in the final stages, but labour shortages have dogged new energy projects worldwide, contributing to rising costs and startup delays.

The initial agreement was for the supply of 600 million cubic feet per day. Crescent's affiliate Dana Gas will process and transport the gas to utilities and industrial users in the UAE.

 

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