UAE - Federal Supplies To Northern Emirates.

On June 5, 1994, Amoco (now BP) and the federal ministry of electricity and water signed an agreement whereby the company was to resume gas supplies to the northern emirates through the network of the Emirates General Petroleum Corp. (Emarat). In the 1980s, most of the gas output used to be purchased by Emarat, the Dubai-based federal entity created to supply the northern emirates with a variety of fuels. Emarat and Amoco signed a 20-year agreement in 1982, which came into effect in 1984, whereby the federal entity was to take 200 MCF/d through the latter's network to supply power stations and industrial plants in the northern emirates. The price agreed to was $3.50/m BTU. A dispute arose between the two over the price after the producer agreed to sell gas to Dubai at $1.25/m BTU. Emarat refused to pay for the gas saying it was not being paid by its customers. Amoco refused to pay taxes and royalties it owed the Sharjah government. In 1986 Amoco and Emarat sought arbitration at the International Chamber of Commerce in Paris. Amoco claimed compensation of $600m. The ICC issued its ruling in Feb. 1988: Emarat should pay Amoco $383m within 30 days. No payment was made until April 1992, when the UAE Central Bank, acting on behalf of the UAE government, credited Sharjah with Dh1.2 bn. Of this, Dh300m went to Amco net of taxes and royalties. After Amoco stopped supplying Emarat, in 1993 the governments of Abu Dhabi and Sharjah signed a contract under which Abu Dhabi undertook to guarantee payment for gas supplied to the northern emirates.