Dubai, 11 August (Argus) — An international arbitration tribunal has held up the validity of a gas contract signed between the UAE's Crescent Petroleum and Iran's state-owned oil firm NIOC. Crescent had started arbitration proceedings in 2009 over a failed project to export 1bn ft³/d (10.3bn m³/yr) of gas from Iran to the UAE originally agreed to in 2005.
“Dana Gas has been notified by Crescent Petroleum that the arbitration tribunal has issued a final award for the merits phase of proceedings, determining that the 25-year contract between it and NIOC is valid and binding upon parties and that NIOC has been obligated to deliver gas under the contracts since December 2005,” its subsidiary said.
Iran's oil ministry declined to comment on the issue when contacted by Argus. Iranian oil minister Bijan Namdar Zanganeh, who has initially signed the deal during his first tenure as oil minister, criticised Crescent in June for using what he called “corrupt” and “divisive” methods to deal with the issue. He also dismissed comments by industry minister Mohammad Reza Nematzadeh that Iran would be liable to pay $18bn in damages as “completely incorrect”.
The statement by Dana Gas did not specify if any damages were awarded to Crescent. The arbitration case could result in an award of $1bn-4bn against Iran, the chairman of energy consultancy Facts Global, Fereidun Fesharaki, said last month.
The deal, which was signed during the presidency of Mohammad Khatami, fell apart after the administration of Mahmoud Ahmadinejad came to power in 2005. Officials in the new administration said the gas price agreed in the original deal was too low and insisted on improved terms.
Dana, along with its partners, is also involved in an arbitration case against the Kurdistan Regional Government (KRG) for non-payment of dues for gas and condensate production in the semi-autonomous regions of Iraqi Kurdistan. The company also claimed partial victory in its case against the KRG in July but the KRG disputed the company's interpretation of the ruling, saying Dana Gas' claims were “inaccurate and misleading”.
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