Iranian gas arrives in power-deficient Sharjah

The much-awaited Iranian gas has arrived in Sharjah, a source familiar with the situation said.

Although the amount of gas received is only for the commissioning of the gas pipeline, the development means a deal has been reached between Iran and Crescent Petroleum, which holds a substantial stake in Dana Gas.

"With the power shortage worsening, Sharjah will do whatever it takes to alleviate the situation," the source, speaking in the condition of anonymity, said.

"The evidence is obvious - you can already see the gas flaring in Crescent's gas facilities in Sharjah," the source, a gas expert,
said. “The gas received should be about 160,000 mmbtu and this will be used to fill in the pipeline and to check if the pipeline has
leaks. This is a one-time off delivery for the start-up.”

On Monday, Dana Gas said the 25-year gas supply contract between United Arab Emirates-based Crescent Petroleum Co. and the National Iranian Oil Co., or NIOC, has not been cancelled by either party and remains valid.

Zawya, quoting an e-mailed statement said Dana Gas has been notified by Crescent "that the contract remains valid and internationally binding on the parties." Iranian media reported last week that the contract had been cancelled.

Neither party has cancelled the contract, signed in 2001, which remains in international arbitration, it said.

“Talks have been ongoing,” the source said. “But Whether or not the flow of gas will be ramped up remains uncertain due to the heightened sanctions against Iran.”

"There are pros and cons," he said. "The good thing is that there will be more gas available. It will also be good for the Iranians
because this means substantial revenues for them."

If it happens, Iran could receive up to $650,000 of daily revenues per day at the price of $5 per mmbtu. “If the flow continues,
about130,000 mmbtu of gas could be delivered per day,” he said.

If and when ramped up to 300,000mmbtu per day in 2012, revenues would kick off to $1.5mn per day. By 2015, the flow could reach 600,000 mmbtu per day or a daily revenue of $3 million (Dh11m).

"Mind that the design capacity is 1mn mmbtu so the revenue potential for the Iranians is massive," he said.

The deal however is likely to face opposition from the international community and even in from the UAE’s federal government, he said.

Reuters recently reported that ships carrying petroleum to Iran now face greater scrutiny at ports in the UAE.

While the latest sanctions have excluded Iranian crude oil sales, refined oil products imports have been affected with more shipowners fearful of being in breach of the measures.

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