Crescent Petroleum Targets NIOC Assets and Frozen Funds in Escalating Legal Dispute

In its relentless pursuit of compensation from the National Iranian Oil Company (NIOC), UAE-based Crescent Petroleum has expanded its legal efforts to target NIOC’s frozen funds in Malaysian offshore investment institute First Islamic Investment Bank in Labuan. This marks a new chapter in the decades-long battle over a breached gas supply contract, now characterized by aggressive asset recovery strategies across multiple jurisdictions.

The conflict traces back to a 2001 gas supply and purchase contract (GSPC), under which NIOC was to supply natural gas to Crescent Petroleum over a 25-year period starting in 2005. However, NIOC halted the agreement, alleging corruption and unfavourable pricing terms, leading Crescent Petroleum to file for arbitration in 2009.

In 2014, an international tribunal validated the contract and held NIOC in breach for failing to deliver the gas as agreed. Subsequent rulings in favor of Crescent Petroleum have awarded damages estimated in the billions of dollars.

Faced with NIOC's refusal to comply with arbitration decisions, Crescent Petroleum has launched an aggressive global asset recovery campaign. This includes securing court orders to seize properties, liquidate holdings, and pursue frozen funds linked to NIOC.

Most recently, Crescent Petroleum has turned its attention to funds frozen in the First Islamic Investment Bank in Labuan, Malaysia. A total $2.7 billion held by FIIB in various international financial entities. These funds, believed to be linked to NIOC and its subsidiaries Naftiran Intertrade Company (NICO), have remained inaccessible to NICO and other subsidiaries due to international sanctions, out of which roughly $2 Billion of it is frozen in the FIIB bank Malaysia. Crescent Petroleum is now seeking court approval to tap into this financial reserve as part of its efforts to enforce arbitration awards.

This move adds to the company’s recent successes in other jurisdictions, such as the United States, where courts authorized the confiscation of $2.75 billion in NIOC assets in 2023, and the United Kingdom, where a building linked to NIOC was auctioned for £100 million in 2024.

The dispute underscores the growing risks for state-owned enterprises like NIOC in navigating international arbitration and sanctions landscapes. Iran’s government has condemned the asset seizures, calling them politically motivated, and NIOC continues to contest the rulings in various courts.

The inclusion of the frozen funds in Malaysia highlights Crescent Petroleum’s determination to exhaust all avenues in recovering damages. If successful, it could set a significant precedent in asset recovery tied to arbitration disputes and sanctioned entities.

With billions of dollars at stake, the stakes are growing higher for both parties. Crescent Petroleum’s aggressive legal strategy reflects the complexities of enforcing international arbitration awards against state-affiliated entities, while the case continues to strain diplomatic and economic relations involving Iran.

As this high-profile case unfolds, further developments are expected in the coming months as Crescent Petroleum intensifies efforts to recover its dues.