Iran appeals court ruling over Crescent deal with UAE
Baku, Azerbaijan, Nov. 8
By Umid Niayesh - Trend:
Iran has appealed the international tribunal verdict over the disputed Crescent deal with the United Arab Emirates (UAE), the country's Fars news agency reported Nov. 8 citing the Islamic Republic oil ministry's sources.
The legal experts have little hope of changing the arbitration award in favor of Iran, according to the report.
The UAE-based energy firm Dana Gas said on Aug. 10 that an international tribunal had issued a favorable ruling in the dispute over a natural gas supply contract between its affiliate Crescent Petroleum and Iran.
The tribunal ruled a 25-year contract for National Iranian Oil Co (NIOC) to supply gas to Crescent was valid and binding on both parties, and that NIOC has been obligated to deliver gas since December 2005, Dana said in a statement, Reuters reported.
Earlier Iranian media outlets quoted industry minister Mohammad Reza Nematzadeh as saying Iran has been fined $18 billion over the case.
The NIOC and Crescent signed the 25-year contract in 2001, with the price linked to oil. Based on the contract, Iran was supposed to export unrefined natural gas from Salman gas field to the United Arab Emirates. However deliveries were delayed as oil prices rose and some officials and politicians in Iran called for a revision to the gas pricing formula.
Iranian conservatives repeatedly called the contract shameful, saying the price agreed on in the contract was 14 times below the market price.
Crescent Petroleum started arbitration proceedings in July 2009; a three-person arbitration tribunal was formed under terms of the contract.
According to Dana, NIOC introduced gas into its transmission network and Dana's UAE processing facilities for commissioning purposes in July 2010, but then discovered leaks in the transmission system, which was shut down again.
Based on the contract, Iran was supposed to export 195 million cubic feet of gas to the UAE in the first phase. The figure could be raised to 700 million cubic feet in the next phases.
The Salman gas field is shared by Iran and the UAE. Some 70 percent of the offshore gas field is located in Iranian waters and the remaining 30 percent in the Gulf littoral Arab state.