Peninsula - 3/5/2006

The United Arab Emirates’ Dana Gas said yesterday it hopes to start receiving Iranian gas this year as part of a politically sensitive deal that is snagged by price negotiations.

General Manager Rashid Saif Al Jarwan also told reporters that in the meantime, the firm was eyeing other upstream, middle stream and downstream projects in the energy producing Gulf region and the Middle East.

“Right now, we’re following very closely the progress of the (Iran) project. The reason the gas is not delivered yet is the Iranian side has to complete their project, in terms of facilities,” Jarwan said.

“We believe the delays are not really that significant... God willing (supplies will start) this year,” he said on the sidelines of an oil and gas conference in Abu Dhabi.

Dana Gas sells gas to utilities and other industrial users. The firm and one of its shareholders, Crescent Petroleum, own a separate company which was set up to import gas from Iran.

Crescent had expected the first deliveries by mid-2006 but the deal has run into delays due to disputes over pricing.

The deal has also become politically contentious in Tehran with many politicians saying Iran will lose out severely because gas prices have risen sharply since the contract was agreed.

Jarwan declined to discuss the price negotiations between Crescent and the National Iranian Oil Company, saying Dana Gas was not a party to the talks.

Dana Gas shares have been hit by concerns that Crescent Petroleum may have to pay more for the gas imports.

“I would rather see the interest of Dana Gas to be beyond this one project and we are currently assessing several high potential opportunities in the gas sector in the entire Gulf region,” he said.

Jarwan told the conference the pipeline to receive the Iranian gas was capable of handling up to 1 billion cubic feet of gas per day and that the current agreement was for 600 million cubic feet per day.

He also said Dana Gas was looking at some 10 investment opportunties in the region, but he declined to give details.

“It is our ambition to enter the upstream sector in Gulf countries, mainly in Saudi Arabia, Qatar and the UAE, where there are vast gas reserves,” he said.

Demand for energy in the Gulf region has been rising rapidly due to population growth and an economic and construction boom on the back of record oil revenues.

Jarwan said demand for gas for power generation and water desalination in most Gulf states was growing at 10 percent annually, adding that this presented a golden opportunity for Dana Gas and other private energy firms.