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Sat 27 Sep 2008 11:33 PM

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We can keep gas if price not right, Iran tells UAE

Oil minister Nozari says 2001 price must be 'corrected' or the gas will be piped inland. 

Iran said on Saturday it would sell gas to Crescent Petroleum of the United Arab Emirates if the price previously agreed was raised but is building facilities so it could use the fuel at home if not.

Oil Minister Gholamhossein Nozari also told Fars News Agency a Pakistani team would visit Iran in days for talks on another gas export project that has been under discussion for years.

Iran, the world's fourth largest oil exporter, has been slow to develop gas exports despite huge reserves partly because US sanctions have hindered the building of plants to make liquefied natural gas (LNG) for shipment. Iran now relies on pipelines.

Asked about the Crescent deal, the minister said: "If the price in this contract is corrected, the export of gas will go through. Otherwise the gas from the Siri region will be transferred via a 32-inch, 270-km long pipeline under construction now from Assalouyeh to the country's interior."

Siri is an offshore area of the Gulf near the Salman gas field that will supply Crescent if a deal is agreed. Assalouyeh is the capital of Iran's gas industry on the Gulf coast.

The Crescent deal was initially signed in 2001 but hydrocarbon prices have soared since then.

Pricing has also delayed a deal to build a gas pipeline to Pakistan and on to India, although testy relations between the Pakistani and Indian governments have also held up talks.

"In the course of the next two days a Pakistani team will come to Tehran to follow up on negotiations," Nozari said.

"Iran's proposal in the... pipeline is attaining a formula wherein the final sale price to Pakistan would be set a year before delivery," he added.

Iran exports gas to Turkey and has a deal to sell 3 million cubic metres of gas per day to neighbouring Armenia in return for electricity.

An Iranian official said this year the Armenian deal would come into effect in October but said this depended on Armenia.

"We have completed the project on our part and we are fully prepared to launch exports. It is Armenia's problem, as it lacks readiness to receive gas at its end," Nozari said.

Iran also imports gas from Turkmenistan, to its northeast, so it can supply a region of Iran that is difficult to reach from its national pipeline grid and gas fields in the south.

Turkmenistan cut gas supplies to Iran last winter, a move Iranian officials said at the time was because it wanted a higher price. Supplies have since resumed but the two sides are still discussing pricing.

"The gas price from Turkmenistan must be based on a win-win agreement as both their resources must be preserved and our purchase should have economic justification," Nozari said. (Reuters)

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