An office block worth £100 million ($125 million) in central London should be seized from Iran’s state oil and gas company and given to a leading international energy business to repay part of a $2.6 billion debt, a UK judge has ruled.
The property, NIOC House on Victoria Street, sits in prime real estate in sight of the UK’s Parliament and historic Westminster Abbey, and has been owned by the National Iranian Oil Company (NIOC) for nearly 50 years.
NIOC tried to argue that the transfer of the property title deeds to its own pension fund put the building out of reach of creditors, but the judge ruled that the Tehran producer was the beneficial owner of the property.
NIOC owes $2.6 billion to Crescent Gas Corporation (CGC) from a 25-year contract signed in 2001 to sell gas to the Sharjah-headquartered company.
Under the deal at the heart of the dispute with Crescent, NIOC was supposed to supply 600 million cubic feet a day of gas by pipeline from its Salman field, in the southern Arabian Gulf, to Sharjah. Dana Gas, also based in Sharjah and 21 per cent owned by Crescent, was to have distributed the gas once it landed.
Iran, despite vying with Russia as the holder of the world’s largest gas reserves, is a net importer of gas and has struggled to follow through on agreements to supply it.
In his ruling, Sir Nigel Teare, sitting as a High Court judge, said that NIOC “failed to supply any gas”, which led to CGC seeking arbitration in 2009. It was eventually awarded damages in 2014.
NIOC was ordered to pay $2.429 billion in December 2021 and interest on that is now increasing at $15 million per month, the court document shows. The amount awarded has been upheld by a UK commercial court and its Court of Appeal.
CGC went to court in a bid to secure payment of its debt against NIOC House. Though a “significant asset against which CGC seeks to execute”, its value “represents a small fraction of the ever-increasing” amount it is owed by the Iranians, said Sir Nigel. The property is worth between £80 million and £104 million (£99 million- $130 million).
CGC went to register an interim charging order on NIOC House, which requires the owner to tell creditors if it plans to sell a property, but it was found that ownership had been transferred to NIOC’s pension fund in August 2022.
The judge said there is a “cogent case for concluding or inferring that the only credible explanation for such urgency” in transferring ownership is that NIOC was “acting as quickly as they could to effect the transfer before CGC was able to enforce the judgment against NIOC House”.
The judge ordered that NIOC’s pension fund transfer the property to CGC, but the Iranians can still appeal against the decision.
The building appears to be currently empty but has previously housed commercial tenants as well as providing top-floor offices for the state-run company.
As a landlord it has also provided a venue for the British-Iranian Chamber of Commerce, formerly chaired by Norman Lamont, the former Conservative chancellor of the exchequer, and now chaired by Jack Straw, the former foreign secretary.
