TEHERAN — A top Iranian lawmaker has called on the oil ministry to renegotiate or even scrap a natural gas deal with Crescent Petroleum of Sharjah in the United Arab Emirates, another sign that the combative new parliament may not stand by deals struck by the previous reformist administration.

Kamal Daneshyar, who heads Iran's parliamentary Energy Commission, claims Crescent isn't paying enough for the Iranian gas it's planning to import. The Majlis, or parliament, will debate the deal in mid-March after the passage of the budget bill, he added.

"What is now obvious is that the price in the contract has got a lot of problems," Daneshyar told Dow Jones Newswires in a telephone interview. "Therefore, either the price should be corrected or the contract revoked."

A spokesman for Crescent played down such suggestions. "As for the issue of gas pricing, there are proper mechanisms in the contract for addressing these over the 25-year life of the agreement, which is normal in the industry," the spokesman said, describing the deal as "firm and internationally binding."

"Any suggestions of impropriety are baseless," he added.

An Iranian oil official, however, expects similar assaults on other deals made while Bijan Zanganeh was oil minister. "We are going to see a lot of this kind of thing, with the Majlis reacting against projects which were signed under the previous administration," said the official, who spoke on condition of anonymity.

Iran's recently appointed oil minister, Kazem Vaziri Hamaneh, said last week the deal was legal, but due to the increase in global oil prices, Iran is renegotiating the price with Crescent.

"The contract has an article that allows for the revision of the gas price," Vaziri told a small briefing, according to IranOilGas.com, a Teheran-based industry news portal. "Unless the country's national interests are secured, no gas will be exported to the UAE."

Crescent Petroleum in 2001 signed a deal to import natural gas from Iran's offshore Salman field through a pipeline jointly built by Iran and Crescent.

Last year, Crescent became the cornerstone investor in Dh6 billion Dana Gas, the region's first private-sector gas processing and distribution firm, listed on the Abu Dhabi Stock Market.

Crescent Petroleum, Bank of Sharjah and the Sharjah government own 32.7 per cent of Dana Gas. Other high-profile Gulf investors — including many members of Golf royal families — have 32.3 per cent. The public took the remaining 35 per cent in an initial public offering that was oversubscribed 140 times.

Dana Gas, in turn, has a 35 per cent stake in Crescent Natural Gas Corporation Limited, or CNGCL, with the remainder held by Crescent Petroleum. CNGCL, according to Dana Gas' web site, has access to UAE gas reserves, as well as the 25-year deal for the supply of natural gas from the National Iranian Oil Company.

The fact that the Iran deal involves Crescent and not Dana shows that Dana isn't reliant on Iranian gas, said a Crescent executive.

But the public's perception of Dana Gas is that it has secured access to large Iranian gas volumes, investors say.

Audit prompted criticism: Regarding the discussions now underway in Iran, the Crescent executive said: "It's only natural that Iran is debating about its future oil policy."

Iran's gas deal with Crescent triggered criticism from Iranian audit officials earlier this month.

Mohammad Reza Rahimi, director of Iran's state auditing inspectorate, said the Islamic republic would lose around $21 billion over the course of the export contract because of the low price and described the deal as the most corrupt since the Islamic revolution in 1979.

"This contract will have to be corrected, or some of its provisions revoked," Rahimi said.

But the deal has won the backing of other Iranian officials, including Ahmed Rahgozar, the former deputy oil minister for international affairs who signed the agreement with Crescent in 2001.

In an article published in the Iranian Sharq newspaper earlier this month, Rahgozar said Crescent is paying around $1 per million British Thermal Units for the gas, which he said is similar to other Arabian Gulf gas deals.

He also said the amount paid by Crescent — based on an oil price of $18 a barrel — is variable, though the price formula is fixed for seven years.

"In the contract the change of price has been forecast in case the oil price goes up," he wrote. "Recently I was notified that we had once again invited Crescent for negotiations."

The Iranian oil official who spoke on condition of anonymity also believes parliament is unlikely to derail the deal. "When they (the Majlis) assess this project properly and look at the contract they will back off," he said. "After all, a contract is a contract."

A Teheran-based oil analyst said parliament is unlikely to revoke the contract completely, but wants the oil ministry to revise the terms.

"It's more likely pressure on the ministry to sit down and renegotiate," said Ali Ghezelbash, an analyst with business consultancy Atieh Bahar Consultants.

Iranian political analyst Saeed Leilaz agreed.

"When the Crescent Case comes to a vote, the Majlis might not turn down the contract," Leilaz said.

Iran is set to start exports in the summer, with 510 million cubic feet of gas to be pumped from the Salman field to a pressurising plant in Sirri and from there to Sharjah in the UAE.

Crescent's spokesman said the pipeline is now over 90 per cent complete and the first gas deliveries are expected by the middle of 2006.

He said so far the combined total investment is well over $1 billion.

But the leader of the Majlis energy committee wants Iran to scrap the deal and to use the gas for reinjection to boost crude output.

Daneyshar said any fine for pulling out of the Crescent deal would be minimal compared with the losses Iran is incurring on the export deal.

"To give you an idea of how cheap the gas has been sold, every one cubic metre of gas has the energy equivalent of one litre of diesel fuel, and one litre of diesel fuel is selling now at around 50 cents," he said. "Whereas our gas in the contract has been priced at less than 2 cents per cubic litre, or one 25th of the real market value, so you see where the problem lies."