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Mon 28 Jul 2008 10:19 AM

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Iran-UAE gas deal 'will be finalised'

Crescent Petroleum remains optimistic over long-running negotiations for importing natural gas.

Crescent Petroleum said on Monday it was still optimistic it could finalise a deal with Iran on importing natural gas to the United Arab Emirates, after a senior Iranian official said he opposed terms agreed so far.An Iranian vice-president said in comments reported on Sunday that he would oppose the contract unless aspects of the deal were "corrected". He did not specify the areas he opposed but a key sticking point in the long-running talks has been the price.

"I'm optimistic, very optimistic," Hamid Zaheri, general manager in Iran of the privately owned firm, told Reuters, adding negotiations with the Oil Ministry were continuing.

Asked how much remained outstanding in the talks between the two sides, he said "not much", without elaborating.

Iran and Crescent Petroleum, based in Sharjah in the UAE, have been locked in negotiations about the price of gas exports from the Iranian offshore Salman field since 2006.

Mohammad-Reza Rahimi, Iran's vice-president for parliamentary affairs who in the past has been strongly opposed to the deal as contrary to the country's interests, said Oil Ministry officials were in the process of amending it.

Rahimi said a large part of the contract had now been "corrected" but he would remain opposed if its "problems are not thoroughly eliminated," the Oil Ministry website Shana quoted him as saying on Sunday.

Zaheri, the Crescent official, suggested price and volume of gas were still being negotiated but declined to go into details or say when he believed a final agreement could be reached.

In April, Tehran threatened the UAE firm that it would use the gas at home if the price dispute were not resolved.

But Iran said the following month that its latest talks with Crescent were "very positive" and the company's chairman in June said it expected to start importing gas in three months.

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.

Crescent's affiliate, Dana Gas, will process and transport the gas to utilities and industrial users in the UAE.

Experts have previously said Iran had yet to complete building facilities to pump gas to the UAE, while Crescent's offshore pipeline and processing facilities for the gas have long been completed.

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. (Reuters)

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