ArabianBusiness.com, United Arab Emirates

Sunday, 28 September 2008

We can keep gas if price not right, Iran tells UAE

by Hashem Kalantari
Saturday, 27 September 2008

PRICE WRANGLE: Iran’s oil minister Gholamhossein Nozari (pictured).
(Getty Images) Iran said on Saturday it would sell gas to Crescent
Petroleum of the United Arab Emirates if the price previously agreed
was raised but is building facilities so it could use the fuel at home
if not.

Oil Minister Gholamhossein Nozari also told Fars News Agency a
Pakistani team would visit Iran in days for talks on another gas
export project that has been under discussion for years.

Iran, the world’s fourth largest oil exporter, has been slow to
develop gas exports despite huge reserves partly because US sanctions
have hindered the building of plants to make liquefied natural gas
(LNG) for shipment. Iran now relies on pipelines.

Asked about the Crescent deal, the minister said: "If the price in
this contract is corrected, the export of gas will go
through. Otherwise the gas from the Siri region will be transferred
via a 32-inch, 270-km long pipeline under construction now from
Assalouyeh to the country’s interior."

Siri is an offshore area of the Gulf near the Salman gas field that
will supply Crescent if a deal is agreed. Assalouyeh is the capital of
Iran’s gas industry on the Gulf coast.

The Crescent deal was initially signed in 2001 but hydrocarbon prices
have soared since then.

Pricing has also delayed a deal to build a gas pipeline to Pakistan
and on to India, although testy relations between the Pakistani and
Indian governments have also held up talks.

"In the course of the next two days a Pakistani team will come to
Tehran to follow up on negotiations," Nozari said.

"Iran’s proposal in the… pipeline is attaining a formula wherein the
final sale price to Pakistan would be set a year before delivery," he
added.

Iran exports gas to Turkey and has a deal to sell 3 million cubic
metres of gas per day to neighbouring Armenia in return for
electricity.

An Iranian official said this year the Armenian deal would come into
effect in October but said this depended on Armenia.

"We have completed the project on our part and we are fully prepared
to launch exports. It is Armenia’s problem, as it lacks readiness to
receive gas at its end," Nozari said.

Iran also imports gas from Turkmenistan, to its northeast, so it can
supply a region of Iran that is difficult to reach from its national
pipeline grid and gas fields in the south.

Turkmenistan cut gas supplies to Iran last winter, a move Iranian
officials said at the time was because it wanted a higher
price. Supplies have since resumed but the two sides are still
discussing pricing.

"The gas price from Turkmenistan must be based on a win-win agreement
as both their resources must be preserved and our purchase should have
economic justification," Nozari said. (Reuters)