Q&A: Unpacking the controversy around the Iran-UAE Crescent gas deal

The 2001 gas supply agreement between the National Iranian Oil Company (NIOC) and the UAE-based Crescent Gas Corporation (CGC) remains one of the most controversial topics in Iranian politics.

The agreement, signed during the administration of reformist President Mohammad Khatami, was never implemented.

Iran has been ordered to pay substantial damages to Crescent and has lost billions of dollars in potential revenue after gas exports under the deal, which were supposed to begin in 2008, failed to materialize.

The controversy primarily centers on allegations of corruption leveled by ultra-hardliners against former Oil Minister Bijan Zanganeh and other officials aligned with the so-called reformist faction, unfavorable rulings by international arbitration courts against NIOC, and the loss of substantial revenue from the Salman oil and gas field.

Q: What is the Crescent Deal?

The Crescent gas deal was a 25-year contract to export natural gas from Iran's offshore Salman field in the Persian Gulf to the United Arab Emirates.

Under the agreement, Iran was to deliver approximately 500 million cubic feet of natural gas per day to the UAE, starting in 2008.

Crescent Gas invested approximately $300 million in infrastructure, including a gas sweetening plant and transmission facilities, while NIOC spent over $1.5 billion developing the Salman gas field and its related transport infrastructure.

Negotiations with the UAE side over pricing terms continued after the government transitioned to populist President Mahmoud Ahmadinejad in 2005. These talks initially broke down due to Tehran's insistence that the previously agreed price was too low compared to rising global prices at the time.

The Ahmadinejad administration later dropped its opposition to the agreement and chose to implement it. However, under political pressure, NIOC ultimately refused to begin supplying gas to CGC as agreed.

Q: Who opposed the Crescent deal and why?

Saeed Jalili, ultra-hardline politician and secretary of Iran's Supreme National Security Council (SNSC) under then-President Ahmadinejad, is known as the staunchest critic of the Crescent Deal.

Former Oil Ministry official Mahmoud Khaghani claimed in July 2024 that in early 2010, Ahmadinejad urged the Supreme National Security Council to resolve the Crescent issue in order to avoid litigation.

Khaghani, accused Jalili of sabotaging the deal due to personal grudges against former Oil Minister Zanganeh, the architect of the deal, and insisted that the deal should never be implemented. According to Khaghani, Jalili argued that CGC would not be awarded more than $850 million in damages if the case went to court.

Proponents of the deal have also accused Jalili of attempting to create insurmountable obstacles in nuclear talks with world powers while he headed the nuclear negotiation team.

Currently a member of the Expediency Discernment Council (EDC), appointed by Supreme Leader Ali Khamenei, Jalili leads the faction within the EDC that opposes Iran's accession to the conventions of the global money laundering watchdog, the FATF.

Despite repeated challenges from Zanganeh to publicly debate the matter, Jalili has declined, stating that the issue is too complex for a debate and should instead be resolved in court.

Q: What legal steps has CGC taken against NIOC?

In 2009, Crescent Gas filed a lawsuit against NIOC with the Permanent Court of Arbitration (PCA) in The Hague. In 2014, the arbitration court ruled that NIOC had breached its contractual obligations.

In 2021, the arbitration tribunal awarded CGC $2.43 billion in damages for lost profits due to NIOC's failure to deliver gas. NIOC appealed the ruling to the Court of Appeal in London, but the appeal was rejected in July 2023.

As of January 2025, the award, including accrued interest, amounts to approximately $2.75 billion.

Separately, in September 2021, another tribunal awarded Dana Gas, an affiliate of Crescent Petroleum, $607.5 million for NIOC’s failure to supply gas under the same agreement. This award only covers the first 8.5 years of the 25-year contract.

Additional arbitration claims could raise the total damages sought from NIOC to as much as $18 billion.

Q: Has NIOC paid the sums awarded to the UAE side?

To date, NIOC has not fulfilled its payment obligations. However, Crescent Petroleum has successfully obtained orders to seize NIOC assets abroad in order to enforce the arbitration awards.

In April 2024, a UK court ordered the transfer of the NIOC House in London to CGC as partial settlement of the damages. More recently, another NIOC-owned building in Rotterdam, the Netherlands, was seized for the same purpose.