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Mon 17 Sep 2007 12:32 AM

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Iran, UAE's Crescent locked in gas price row

Iran says it will find other customers if UAE firm does not agree to higher price.

Iran will find other customers for gas assigned to a deal being negotiated with Crescent Petroleum or use the fuel itself if the UAE firm does not agree to pay a higher price, Iran's oil minister said on Sunday.

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

The deal has become politically contentious in Iran, with many prominent politicians saying Iran will lose out because gas prices have risen sharply since the contract was agreed.

"Until the price is corrected, we are not going to sell them (Crescent) natural gas," Gholamhossein Nozari told a news conference.

The project involves supplying gas from Iran's Salman field in the 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 Gulf Arab states seeking natural gas supplies from Iran, which holds the second-biggest natural gas reserves in the world after Russia. But the Islamic state has been slow to develop its reserves for export.

Dana Gas officials have said pricing was not the main reason for the project's delay, arguing that it was due to an offshore gas production platform that should have been finished in September 2005 by Iran but which was still being built.

Dana Gas was set up to deliver gas to utilities and industrial users in the UAE. With the Iran gas deal delayed, the company has virtually no operating income.

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