Following the recently cancelled gas contract with Sharjah based Crescent Petroleum with which it had a long standing supply dispute, Iran’s head of the National Iranian Oil Company (NIOC) has called for a shift to directly dealing with the UAE.
Javad Oji, who is also Iran’s deputy oil minister said the contract had been nullified and that from now on: “The oil ministry’s policy is the direct sale of gas to the UAE government,” according to the semi official Mehr news agency.
NIOC and Crescent signed a 25 year gas contract in 2001, with a price linked to oil. But as oil rallied some Iranian officials called for a revision to the price formula and blamed the price dispute for delivery delays.
A Crescent Petroleum spokesman denied the cancellation of the contract saying it was internationally binding and that it was in international arbitration.
Javad said: “For the sale of gas to neighbouring countries, a unified price formula has been set and all negotiations will be conducted on the basis of this formula obtained on the basis of oil and oil derivative prices.”
As a major crude exporter, Iran sits on the world’s second largest natural gas reserves after Russia, however international sanctions that hinder access to Western technology and the lack of expertise amongst other factors have slowed its development as a major exporter.
Oji said gas exports in the last Iranian year, which ran to March 21, 2010, were up 44% year on year at US$6.8 billion. Iran also earned $1.8 billion from the swap and transit of gas during the same period.
Production capacity stands at 540 million cubic metres per day, he said.
Iran had secured a permit from Turkey to transit gas through its territory and was now in negotiations to export gas to Europe, Oji said.
Turkey said in April that Iran may export gas to Switzerland via Turkey in exchange for transit fees if it goes ahead.
