UAE’s Ras al-Khaimah Wants Iran’s Gas

A01128868.jpgTEHRAN (FNA) – The UAE’s Ras al-Khaimah emirate is still hoping for gas supplies from Iran despite political pressure not to deal with its northern neighbor and a lack of progress on talks, an official said on Tuesday.

The United States has put pressure on companies to stay away from deals with Iran.

Talks between the emirate of Ras al-Khaimah and Iran and Oman have been ongoing for years over gas from the West Bukha/Hengam offshore gas field.

Iran and Oman share the field, but Ras al-Khaimah has a pipeline from Oman’s nearby Bukha field to import gas. It hopes to extend the pipeline to receive gas from any deal between Oman and Iran to carve up West Bukha/Hengam.

“It would be the easiest thing to drill on the Iranian side and pipe the gas through to Ras al-Khaimah,” said Ruurd Abma, chief operating officer for the government-owned Ras al-Khaimah Gas Company (Rakgas).

“Talks are still at a preliminary stage. There are political considerations and the terms of oil and gas deals with Iran aren’t so attractive,” he told reporters on the sidelines of an energy conference.

Government-owned RAK Petroleum is heading the talks with Iran and Oman, in which Rakgas is also participating, Abma said.

Ras al-Khaimah receives 30 million cubic feet per day (cfd) of natural gas from the Bukha field, which it hopes to boost to 40 million cfd soon through wells drilled by RAK Petroleum on Oman’s side of the West Bukha field, Abma said.

RAK Petroleum will start building a pipeline to link West Bukha and Bukha in May, he added.

Gas demand in the emirate is over 300 million cfd and supply meets just over a tenth of that. Buyers such as cement manufacturers have had to use diesel and other oil products to substitute for gas, Abma said.

Ras al-Khaimah is analyzing other ways to meet its energy demand, and considering options such as an import facility for liquefied natural gas or coal-fired power plants.

Rakgas is also exploring for gas in eastern Tanzania.

Gas supply will improve in April, when the emirate will receive another 80 million cfd from the offshore fields of neighboring emirate Umm al-Quwain, Abma said. That was a few months later than the previously planned Jan. 1 start date.

China’s Sinochem subsidiary Atlantis is developing the offshore fields and laying a 75 km pipeline into Ras al-Khaimah to deliver the gas.

Rakgas also has a contract to take delivery of around 100 million cfd from Dana Gas in the neighboring emirate of Sharjah.

That deal is for a share of gas to be distributed by Dana under an import contract with Crescent Petroleum from an offshore Iranian oilfield.

The imports have been delayed by over a year and a half due to price disputes.

Officials of the United Arab Emirates’ private energy firm Crescent Petroleum arrived here in Tehran on the last day of January to continue long-running talks over pricing Iran’s gas supplies to the Persian Gulf Arab state.

The Crescent team comprised the company’s executive director and a number of negotiation experts.

Iran and Crescent, a shareholder in the UAE energy firm Dana Gas, have been locked in negotiations over pricing the gas for export, since it was signed in 2001.

Crescent had expected first gas deliveries by mid-2006 but the deal ran into delays after a number of prominent politicians in Iran said the country would lose out because gas prices had risen sharply since the initial contract was signed.

After a report by Iran’s State Audit warned that the contract contained serious problems, Islamic Republic officials intensified efforts to put off the contract.

According to the report, if the contract was put into effect, Iran would have to sustain a sum of $44 billion of loss in 25 years.

Subsequently, Crescent voiced preparedness to revise the contract in September 2006.

Iran has said it would not export gas to the UAE until it secures a fair price.

“Until the price is corrected, we are not going to sell them (Crescent) natural gas,” Iran’s Oil Minister Gholam Hossein Nozari announced earlier.

The project involves supplying gas from Iran’s Salman field in the Persian Gulf to Crescent, which owns a separate company along with Dana Gas for the purpose of importing the fuel from Iran.

“If we do not succeed in correcting the price, we have other customers from Emirates and also Oman for the gas,” Nozari said.

“Also using the gas inside Iran is an option,” he added.

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 rapidly rising domestic demand from industry and power plants.

An Iranian official said last month construction of Iran’s side of the project was in the final stages, but labor shortages have dogged new energy projects worldwide, contributing to rising costs and startup delays.

The initial agreement was for the supply of 600 million cubic feet per day.

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

The United Arab Emirates holds the world’s fifth largest gas reserves but has failed to exploit them quickly enough to meet spiraling demand as record oil revenues fuel economic expansion.

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