x Abu Dhabi, UAEThursday 27 July 2017

Iran turns up the heat on UAE's Crescent Petroleum

Iran is demanding substantially higher prices to start natural gas exports to Sharjah.

Iran's government ratcheted up the pressure on the UAE's Crescent Petroleum this week, with officials demanding substantially higher prices to begin exporting natural gas to Sharjah. The Iranian minister of interior, Ali Kordan, who is participating in the negotiations with Crescent, told the conservative daily newspaper Kayhan that the country would consider selling to other countries in the region if the UAE was not willing to accept an increase in prices. "Signing this agreement in the current condition is definitely harmful to Iran," Mr Kordan said in the remarks published yesterday. "We succeeded in increasing the price manyfold, which totals US$1.2 billion [Dh4.4bn] in Iran's benefit, even though none of this has been finalised," he said. Mr Kordan's remarks came a day after Gholamhossein Nozari, the Iranian oil minister, said negotiations had "reached a good point" but the price was not yet finalised and negotiations would continue, the state news agency PIN reported. Mr Kordan's comments are the latest rhetorical shot in a two-year dispute over the start of gas exports to the UAE from the offshore ­Salman gas field. A pipeline to transport 600 million cubic feet of gas per day to Sharjah has been empty since its completion in 2006. The gas is badly needed in the UAE, which has seen the development of industrial projects and new power plants constrained by a shortage of readily available gas. Officials at Crescent, an oil and gas company based in Sharjah, have said the delay was due to the completion of work on gas ­facilities and that negotiations were set to continue. Samuel Ciszuk, an analyst at Global Insight in London, said the Iranian negotiators were in a tough position, because Iran itself was short of natural gas for heating and electricity generation, and political support for an anti-export movement was growing within the Iranian parliament. "Those against exports have been able to rally popular political support," he said. "The prices as they are in the contract, they're just a political no-go. They will never pass parliament." At the same time it was doubtful, he said, that Crescent would pay a higher price, given the low tariffs it was being offered to sell the gas by its customers in the UAE. From an Iranian perspective, however, Iran's other export options are looking increasingly less likely, Mr Ciszuk said, keeping hope for a deal alive. Mr Nozari has previously emphasised that Iran has options other than Crescent - including possible deals with Kuwait, Syria, Turkey, Oman, India and Pakistan - to export pipeline gas. But nearly all of these options have run into problems, Mr Ciszuk said, mainly because of pressure from the US and Saudi Arabia to continue Iran's economic isolation. The country would become even more isolated if it unilaterally tore up the long-standing agreement with Crescent, Mr Ciszuk said. "Iran's whole standing as a potential business partner would really be on the table there," he said. "It would look really, really bad." cstanton@thenational.ae