Font Size

- Aa +

Wed 16 Apr 2008 03:39 PM

Font Size

- Aa +

Iran tells UAE: Agree price or lose gas

Gas will be used for domestic consumption if price dispute is not resolved, warns oil minister.

Iran is serious in its threat to use gas it planned to sell to Crescent Petroleum domestically if a long-running dispute with the UAE firm over price is not resolved, Iran's oil minister said on Wednesday.

Iran and privately-owned Crescent, based in Sharjah in the United Arab Emirates, have been locked in negotiations about the price of gas exports from the Iranian offshore Salman field to the UAE since 2006.

The UAE needs gas from the $1 billion project to meet rising domestic demand from industry and power plants, but the deal became controversial in Iran after some politicians said the export price should be higher.

"If the price is not corrected, the gas will not be delivered to them (Crescent)," Oil Minister Gholamhossein Nozari told a news conference.

"We are very serious and if no agreement is arrived, the gas will be transferred over to the mainland for domestic consumption," Nozari said.

Iran has previously said it would use the gas at home or sell it to others if no deal is reached. Negotiations have continued despite Iranian talk of ultimatums.

Crescent in February said it had made progress on talks to resolve the dispute about pricing and volume for gas imports from Iran but had yet to reach a final agreement.

Crescent officials could not immediately be reached for comment on Wednesday.

As well as the pricing row, the deal has been delayed because Iran has yet to complete facilities to produce the gas. Nozari said in December those facilities were almost finished.

Tehran has no pipeline from the offshore Salman field back to Iran and therefore limited options for domestic use.

Crescent had expected first deliveries of the gas in mid-2006. 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. (Reuters)

For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.