Gas Deal with UAE loses Iraq Billions of Dollars

Iran's member of parliament Seied Mohammad Reza Tajeddini said here on Sunday that Iran has lost billions of dollars by a gas deal with a Gulf firm, the official IRNA news agency reported.

Tajeddini regarded the contract between the two sides as illegal, adding that it was against the constitution and the interest of the Iranian people.

He urged Oil Minister Gholamhossein Nozari to sit over the withdrawal of the contract or the amendments on it.

Crescent Petroleum, a United Arab Emirates (UAE) firm, signed a deal in 2001 to import natural gas from Iran's offshore Salman field, in the Gulf, through a pipeline jointly built by Iran and Crescent.

Iran says that it has suspended export of Iran's gas to the UAE because of the Crescent company's flagging commitment.

Managing director of the National Iranian Oil Company (NIOC), Seifollah Jashnsaz, said earlier this month that the UAE's Crescent has failed to fulfill some of its basic obligations as per the contract, according to Iran's daily Tehran Times.

"The ongoing negotiation between the Iranian and UAE is not only over the price of the contract, but there are other issues involved as well," he said, adding that "We have devised a mechanism in the contract that allows Iran to use the additional output of the Salman gas field inside Iran."

The Crescent Petroleum office in Tehran, in response, sent a letter to the Tehran Times Economic Desk saying that, "The signed 25-year contract is internationally binding on both parties, regardless of price negotiations, and cannot be suspended unilaterally, especially when gas deliveries have yet to commence due to NIOC, National Iranian Oil Company, technical delays."

The original agreement envisaged a contract of 25 years starting from 2005. Based on the agreement, Iran was to export 195million cubic feet of gas to the Gulf state in 2005-2006 followed by exports of 230 million, 300 million and 350 million cubic feet in the following three years.

However, Iran's state auditors have said Iran could lose as much as 21 billion U.S. dollars over the 25-year agreement if gas prices do not meet the market conditions.

Author: Jo Amey