Energy firm to solidify UAE-Iran trade ties

GROWING trade ties between the UAE and Iran have been underpinned by the creation of a new energy company in the Emirates. The new US$1.63 billion UAE-based energy firm is set to import natural gas from Iran.

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By  David Robinson Published  July 31, 2005

GROWING trade ties between the UAE and Iran have been underpinned by the creation of a new energy company in the Emirates. The new US$1.63 billion UAE-based energy firm is set to import natural gas from Iran. “The trade relationship with Iran is of massive strategic importance to the UAE and now in the region of US$4.5 billion annually,” said Emilie Rutledge, an economist at the Gulf Research Centre in Dubai, told Arabian Business. Should the UAE keep increasing its trade volume with Iran, it is likely that US would use its diplomatic channels to privately voice its concerns. Washington views investment in the Islamic republic’s energy sector as encouraging Tehran’s alleged support for terrorism and pursuit of nuclear technology. “Trade with between the UAE and Iran has been growing far more significantly in the last couple of years than the trade with the US, despite ongoing negations over a Free Trade Agreement [between the UAE and Washington],” Rutledge added. Dana Gas, the new company, is to launch an initial public offering (IPO) for 35% of the business in September, according to documents seen by Dow Jones Newswires. Crescent Petroleum of Sharjah, the third-largest emirate in the UAE, is the lead investor in what will become the region’s first privately-held gas supply chain, using cheap Iranian gas to fuel utilities and industry. A team at the Dubai-based offices of HSBC Holding is advising and arranging the US$572 million IPO for Dana Gas, the documents say. HSBC is currently approaching large UAE institutions and high-net worth nationals to become new founding investors in Dana, holding US$528 million, or 32.3%, ahead of the IPO on the Abu Dhabi Stock Market, Dow Jones reported. The original core investors, with US$534 million of the equity, or 32.7%, include Crescent Petroleum, the government of Sharjah, Bank of Sharjah, and high-net-worth individuals from Arab Gulf states, the documents add. In principle, up to 49% of Dana can be held by foreign investors, though most of the company will be held by Arab Gulf investors. The US has sanctions on any firm investing more than US$20 million a year in Iran’s oil and gas sector, but Washington has never enforced them against European and Asian companies developing hydrocarbon resources in the Islamic republic, let alone against nations that only buy Iranian gas. Other US allies in the region — Kuwait and Oman — have signed deals to import Iranian gas, while the Islamic republic has been piping gas to Turkey since 2001. India and Pakistan are also considering building a pipeline to ship Iranian gas, prompting criticism from US secretary of state Condoleeza Rice in March. US officials in the UAE declined comment. The White House and State Department had no immediate comment. The White House referred calls to the National Security Council, who had no immediate comment.

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