Iran has ruled out an imminent agreement with Crescent Petroleum of the UAE on the price of gas to be supplied to the Sharjah-based Dana Gas under a memorandum of understanding signed several years ago.

"We still have not reached agreement on the price," Iranian Oil Minister Gholamhossain Nozari said during the World Petroleum Congress in Madrid this week.

Other Iranian officials, quoted by the prominent Norweigan newspaper Upstream said protracted negotiations were still going on and that the facilities to supply gas to the UAE from Iran's offshore Salman field were all but complete. "We are about to begin sending gas to the processing facilities," an official from the National Iranian Oil Company (NIOC) said. "The facilities are 97 per cent complete."

Iran said recently it would award a pipeline contract to divert gas supplies promised to Crescent unless the company agreed to pay a higher price. Iran Petroleum Engineering and Development Company Managing Director Naji Saadouni said the line will transfer gas for domestic use from the offshore Salman field to the mainland port of Assaluyeh in case the Crescent contract is cancelled.

Iran has already spent millions of dollars on building a pipeline linking Salman to facilities near the UAE as well as constructing production and export facilities. The project involves supplying gas from Salman in the Gulf to the emirate of Sharjah. Iranian officials have said the original agreement involves Crescent paying as little as 50 cents per million British thermal units for gas imports from Iran. The price dispute comes at a time when Iran is faced with gas shortages in winter and pays a much higher price for its imports from Turkmenistan, according to Upstream.