It's valid and binding: Dana Gas wins favorable ruling against Iranian company
United Arab Emirates-based energy firm Dana Gas said an international tribunal had issued a favourable 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 on Sunday.
NIOC and Crescent signed the 25-year contract in 2001, with the price linked to oil. But deliveries were delayed as oil prices rose and some officials and politicians in Iran called for a revision to the gas pricing formula.
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.
Dana did not say on Sunday when it expected gas supplies to start flowing, and NIOC officials could not immediately be reached to comment.
A source familiar with the matter said supplies would not begin in the near term, since subsidiary agreements needed to be reached and infrastructure work completed.
The contract provides for the UAE to import some 600 million cubic feet per day of Iranian gas, though the actual amount will depend on many factors and may only become clear in coming months, the source added. The UAE is eager to obtain additional natural gas supplies to support its rapid economic growth.
"Crescent Petroleum also expressed its hope that all matters can now be amicably resolved through constructive discussions with NIOC," Dana said in its statement.
In the last few years, international financial sanctions imposed by the United States and Europe over Tehran's disputed nuclear programme have restricted trade between the UAE and Iran. Dana did not say whether the sanctions might complicate efforts to implement the gas supply contract