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A senior oil official from Iran has threatened to nullify the gas deal the country has signed with the Crescent Petroleum if the UAE-based company maintains its current position regarding the price it will pay for the gas.
The Iran News Agency reported that in answer to Crescent’s threat to take the country to an international court of arbitration, Moayyed Hosseini Sadr, a member of the Iran parliament’s Energy Commission said that Tehran would file its own complaint against the company.
“Iran has no enmity with the United Arab Emirates or any other country and did not and does not insist on annulling the deal but Iran’s interests should undergo a second revision in this deal,” Sadr is quoted as saying.
“But if the Emirati side wants to insist on its positions in this regard, then Tehran will file a complaint with an international court against the UAE’s Crescent Company and considering the infractions by the Emirati side, any relevant international legal body would vote for the nullification of the deal,” he added.
Sadr also said that even if Crescent do take the issue to court, no court would implement a deal which has been signed through bribery.
The 25-year contract, which is Iran’s first contract for gas export from the south of Iran, was signed between the UAE-based company and the National Iranian Oil Company (NIOC) in 2001 after several years of negotiations. NIOC contractually committed to commence gas deliveries to the UAE in December 2005. The contract provides for any disputes to be determined by international arbitration under the rules of the International Chamber of Commerce.
Cresecent Petroleum released a statement in July expressing its frustration at what it perceived to be Iran’s reluctance to commit to its contractual obligations.
“Certain negative public statements by some NIOC officials have led to loss of confidence in NIOC’s respect for its contractual commitments, and we are therefore seeking legal determination of the obligations of both parties,” the statement said.
“Some of our customers have lost patience and are demanding performance, leaving us with no option but to seek a determination on the legal obligation of NIOC to deliver gas, and also to seek an indemnity from NIOC in respect of the claims of our customers,” it added.
The terms of the deal involved Iran exporting 195 million cubic feet (cf) of gas to the UAE in 2005-2006 followed by 230 million cf, 300 million cf and 350 million cf over the next years. The gas would be transported via a 90-mile pipeline from the Salman field to Lavan Island in the Arabian Gulf.
Iran believes it could lose US$21 billion over 25 years if it sticks to the terms of the deal.
