x Abu Dhabi, UAETuesday 25 July 2017

Crescent blames Iranian gas delays on technical problems

Company's president says Iranian facilities are not yet ready, which has delayed gas transportation.

Crescent Petroleum says Iranian technical delays, not inconclusive price negotiations, are the cause of continuing delays in the start of natural gas imports to Sharjah from Iran that were supposed to start in December, 2005. "The National Iranian Oil Company's (NIOC) facilities are still not technically ready and have suffered three years of delays," said Majid Jafar, the executive director of Crescent, a privately held Sharjah oil and gas company.

He said he wanted to know when the Iranian production and export facilities would be ready to pump gas into Crescent's empty undersea pipeline, considering NIOC had earlier announced it was in the final stages of commissioning them. Dana Gas, a publicly held Crescent affiliate, told shareholders at its annual meeting last spring that Iran had completed construction of the facilities. The company said it expected commissioning to take two to three months.

Separately, NIOC and Crescent have been locked in negotiations over the price of the prospective UAE imports of gas from Iran's offshore Salman field in the Gulf, but Mr Jafar denied this was the reason for the lengthy delay. "Our negotiations are ongoing, all under the provisions of the contract, which is internationally binding and Iran's first for gas exports from the Gulf," he said. Crescent was "optimistic" it could reach a workable agreement that protected NIOC's interests, he added.

Mr Jafar dismissed as "utter nonsense" recent media and analyst reports suggesting the price negotiations had failed, that Crescent had offered to pay as much as US$5 (Dh18) per million British thermal units for the gas, and that Iran's parliament had called for a tougher investigation of unproved allegations of bribery against Crescent officials. In particular, he called the price estimate "way off and fanciful".

Delays to the Iranian gas import project have been a major source of frustration for Crescent, which has invested about $2 billion in the pipeline and a gas import terminal, on which it has been unable to realise any financial return. Shareholders of Dana, which had agreed to market and distribute the gas to industrial customers in Sharjah, have also been frustrated. The company's shares fell 4.4 per cent yesterday to close at Dh1.32 on the Abu Dhabi Stock Exchange. Since the beginning of this year, the stock has plunged 39 per cent.

Last month, the Iranian Oil Ministry said it would delay the project until NIOC's contract with Crescent was amended to fit the country's "national interests". The contract was signed in 2001, when the price of gas traded internationally was a fraction of the current price. A Crescent source said the ministry was finding excuses to divert attention from the technical delays. Yesterday, Seyed Reza Kasaeizadeh, the head of Iran's National Gas Export Company, told Bloomberg the facilities would be technically ready to export gas in a few weeks. "The main issue is the pricing. The base of the price is too low," he said.

The UAE is seeking gas imports in order to fuel power developments and industrial projects until it can develop more of its own substantial gas reserves. It imports 2 billion cubic feet a day of gas from Qatar, but that country has declined Abu Dhabi's requests for more gas. * With agencies @Email:tcarlisle@thenational.ae