The UAE Gas Project involves the purchase of 600 MMscf/d imported sour gas sourced from the National Iranian Oil Company (NIOC) for transportation, processing, and sale in the UAE. Gas was to be received at the offshore riser platform, connected to the Mubarak oil field infrastructure then transported via a 30-inch pipeline to the SajGas processing plant in Sharjah. At SajGas, the gas was to be sweetened to remove the sulphur content and natural gas liquids (condensate) extracted for sale within the UAE. Both the offshore riser platform and pipeline are owned by the United Gas Transmission Company, which is wholly owned by Dana Gas, as is the SajGas processing plant.
CNGCL (in which Dana Gas owns a 35% equity share) is the gas marketing company set up to sell gas domestically within the UAE and market the liquids and sulphur products to regional and international customers. However, gas was never supplied by NIOC when the project was scheduled to start in 2005. Accordingly, the gas sales and purchase contract between Dana Gas’ partner, Crescent Petroleum, and NIOC has been the subject of international arbitration since June 2009. In 2014, the tribunal ruled in favour of Crescent Petroleum, finding NIOC to be in breach of contract and liable for damages.
As a result a hearing was held in October 2017 to determine the amount of damages payable by NIOC for the breach of contract during the period from 2005 to 2014. In September 2021 Dana Gas received an update from Crescent Petroleum regarding the issuance of the final award for damages in the first arbitration against NIOC.
This arbitration award covers the first 8.5 years of the 25-year gas sales agreement from 2005 to mid-2014. Dana Gas’s entitlement for the first period is $608 million In addition, a second arbitration comprising a much larger claim for the 16.5 years covering the remainder of the gas supply period from 2014 to 2030 is currently underway. The final hearing is fixed for October 2022 in Paris, and a final award for damages is expected in 2023.
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