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News number: 8805261006

15:21 | 2009-08-17


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Iran Signs Gas Deal with UAE

TEHRAN (FNA)- Tehran and a UAE company signed an agreement for transferring Iran's natural gas to the Persian Gulf littoral country, a senior Iranian oil official announced on Monday.

"We signed an agreement with a UAE's company in a bid to transfer (natural) gas to the United Arab Emirates," Managing Director of the National Iranian Gas Export Company (NIGEC) Seyed Reza Kassaeizadeh said, without naming the UAE company.

The agreement is inline with the Iranian government's policies which prioritize the neighboring states over other countries in exporting the country's natural gas, the official said.

Many foreign companies are negotiating with the NIGEC for developing Ian's gas fields as well as exporting natural gas to the Emirates.

Observers believe that the agreement could refer to a long-waited gas deal between Iran and the UAE's Crescent Company. The National Iranian Oil Company (NIOC) and the UAE's Crescent Company signed a deal in 2001 to transport natural gas through a 90-mile pipeline from the Salman field to Lavan Island in the Persian Gulf.

However, Iran increased its initially proposed price, citing a sharp rise in international gas prices since the time the contract was agreed upon between the two countries.

The original agreement envisaged a contract of 25 years starting in 2005. Iran's state auditors said Iran could lose as much as $21 billion over the 25-year agreement if gas prices do not meet market conditions.

Based on the agreement, Iran was to export 195 million cubic feet of gas to the Persian Gulf state in 2005-2006 followed by exports of 230 million cubic feet, 300 million cubic feet and 350 million cubic feet in the following three years.

Oman and Kuwait are among the Persian Gulf Arab states seeking natural gas supplies from Iran, which holds the second-biggest natural gas reserves in the world after Russia.

The UAE needs the gas to meet its rapidly rising domestic demand from industry and power plants.