Iran, UAE sign $2 billion gas deal

Source: Presstv.ir, 11-10-2008
Iran and the UAE's Crescent Petroleum have signed a $2bn deal to export natural gas from Iran's Salman field to the Persian Gulf country.
The Wall Street Journal reported that the two sides signed the 25 year, $2 billion natural gas deal on Friday.
The agreed price of $5 per million British thermal units of natural gas is reportedly four times the price Crescent pays for gas from Qatar, and more than five times the average weighted price for gas in the Middle East and North Africa.
Despite a recent decline in world oil prices, gas prices in the the Persian Gulf states, particularly the United Arab Emirates, are on the rise. With the number of factories soaring and energy consumption following suit, the demand for natural gas is growing in the country.
The UAE is the fourth largest oil producer in the Organization of Petroleum Exporting Countries but it is in need of clean energy imports to fuel its rapid industrial growth.
"Natural gas is a fuel of choice for clean and efficient power generation," said Majid Jafar, Crescent's executive director.
The original agreement between Iran and Crescent, a shareholder in the United Arab Emirates energy firm, Dana Gas, was signed in 2001.
Technical problems and the failure to agree on a gas price led to extensive delays in negotiations. Following domestic debate in 2006, Iran argued for an increase to the proposed gas price in the agreement, citing a sharp rise in international gas prices from the time the original contract was agreed.
Iran, which has the world's second largest natural gas reserve after Russia, has spent around $1.5 billion on the Crescent project to date, and the country has built a 174-mile undersea pipeline linking Iran's Salman offshore gas field to Crescent's gas-processing facilities in Sharjah.