UK court orders Iran state oil company to surrender $125m London headquarters

A UK judge has ruled that an office block worth £100 million ($125 million) in central London should be seized from Iran’s state oil and gas company.

The property will be transferred to an international energy company to repay part of a $2.6 billion debt.

The property in question, NIOC House on Victoria Street, occupies prime real estate within view of the UK’s Parliament and historic Westminster Abbey.

It has been owned by the National Iranian Oil Company for about 50 years.

NIOC claimed that transferring the property’s title deeds to its pension fund made the building inaccessible to creditors. However, the judge ruled that the Tehran-based producer remained the beneficial owner of the property.

The Iranian company owes $2.6 billion to Crescent Gas Corporation under a 25-year contract signed in 2001 for the sale of gas to the Sharjah-based company.

Under the contract central to the dispute with Crescent, NIOC was supposed to supply 600 million cubic feet a day of gas by pipe from its Salman field in the southern Arabian Gulf, to Sharjah.

Dana Gas, based in Sharjah and 21 per cent owned by Crescent, was responsible for distributing the gas on arrival.

Iran, which rivals Russia for holding the world’s largest natural gas reserves, is a net importer and has faced difficulties in meeting its commitments to supply gas.

In his ruling, Sir Nigel Teare, sitting as a High Court judge, said that NIOC “failed to supply any gas”, prompting CGC to seek arbitration in 2009. The company was awarded damages in 2014.

In December 2021, NIOC was ordered to pay $2.429 billion in damages, with interest accruing at a rate of $15 million a month, according to court documents.

This award has been upheld by a UK commercial court and its Court of Appeal.

CGC pursued legal action to enforce payment of its debt by attaching NIOC House, considering it a significant asset for executing the debt.

It sought to register an interim charging order, which under British law would mean that the owner must inform creditors of any intention to sell the property.

However, Sir Nigel noted that the property’s value, estimated between £80 million and £104 million, represents only a small fraction of the ever-increasing amount owed by the Iranians.

It was also discovered that ownership had been transferred to NIOC’s pension fund in August 2022.

The judge said there was a case for concluding the only credible explanation for such urgency in transferring ownership is that NIOC was “acting as quickly as they could to effect the transfer before CGC was able to enforce the judgment against NIOC House”.

NIOC owes $2.6 billion to Crescent Gas Corporation (CGC) under a 25-year contract signed in 2001