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Iran president says Crescent gas price too low
September 18, 2008 / 3:57 PM / 9 years ago

Iran president says Crescent gas price too low

TEHRAN, Sept 18 (Reuters) - Iran’s president said on Thursday a contract to sell gas to Crescent Petroleum of the United Arab Emirates was based on an unacceptably low price and the deal had been tarnished by corruption.

President Mahmoud Ahmadinejad made the remarks in a news conference. Other government officials have also criticised the contract, though not in such strong terms. Interior Minister Ali Kordan said this week the deal was not in Iran’s interest.

Crescent denied any involvement in corruption and said there was “clearly a misunderstanding”.

Iran and Crescent, based in Sharjah in the UAE, have been locked in negotiations about the price of gas exports from the Iranian offshore Salman field since 2006. The initial deal was signed in 2001 when oil prices were a quarter of today’s levels.

The deal was to supply of 600 million cubic feet per day.

“This contract ... was struck based on an incorrect relationship between some politicians that are active today, at a very low price,” Ahmadinejad told the news conference, when asked about the deal with Crescent.

“This government will not allow even one penny belonging to this nation to be wasted,” the president said.

The deal became controversial in Iran after some politicians said the export price should be higher. An Iranian daily reported this week that the price in the Crescent contract was just 20 percent of that on Iranian gas exports to Turkey.

“The Intelligence Ministry reported to me that behind the scenes of this contract money has been exchanged,” Ahmadinejad said. He said “bribes” had changed hands and that he had told the Intelligence Ministry to complete a report on the deal.

He said Kordan and other allies in office had been criticised but the president described them as “those who prevented this deal of corruption”.

“If they want to buy gas they should buy it at that day’s price but in a clear and clean contract,” he said, adding that neighbouring countries were a priority for gas sales.

CRESCENT SAYS ‘MISUNDERSTANDING’

Responding, a Crescent spokesman told Reuters: “There is clearly a misunderstanding. Crescent Petroleum categorically denies any allegation of any corrupt practices with regard to the contract, which was properly negotiated and executed at a time when energy prices were lower.”

Officials have warned Iran may abandon the deal if they are not satisfied with terms. Oil Minister Gholamhossein Nozari repeated a threat to use the gas at home if the two sides did not agree on a “fair” price, a newspaper reported this week.

Despite sitting on the world’s second biggest gas reserves, Iran has been slow to develop exports partly because U.S. sanctions have hindered access to some technologies.

The UAE, an oil exporter, needs gas from the $1 billion project to meet domestic demand from industry and power plants.

Crescent’s affiliate, Dana Gas DANA.AD, will process and transport the gas to utilities and industrial users in the UAE.

Experts previously said Iran had yet to complete building facilities to pump gas to the UAE, while Crescent’s offshore pipeline and processing facilities had long been completed. (Reporting by Zahra Hosseinian in Tehran and Simon Webb in Dubai, Writing by Edmund Blair, editing by Anthony Barker)

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