Economy, Business And Markets

Petrochem Firms Prefer Europe, US

Petrochem Firms Prefer Europe, USPetrochem Firms Prefer Europe, US

Iranian petrochemical companies are more inclined toward Europe and the United States than China when seeking finance and funds for their projects. Chinese investors reportedly charge exorbitant fees and commissions from Iranian firms because of the sanctions and difficulties related to transferring money to and from Iran.

Deputy Oil Minister Abbas She’ri-Moqaddam said in August that he would prefer investments from Japan, Europe and the US to those from China. Iran, restricted by sanctions, has faced many problems in wanting to use its oil income large portions of which are held in China and the latter does not mind using it to finance projects in the Islamic Republic.

The petrochemical sector in Iran needs around $80 billion in investment over the next decade. Restrictive terms by Chinese investors have prompted Iranian companies to seek investment elsewhere.

Marzieh Shah-Daei, director of projects at the National Petrochemical Company, said Tuesday that two petrochemical companies refused funding from Chinese investors. They prefer to work with European investors.

“These two cases involve the projects for which the allocation of the Chinese financing has not been finalized yet,” Shah-Daei told IRNA. “Project owners awaiting finance prefer not to deal with China because it is expensive due to their high fees.”

According to Shah-Daei, Chinese investors demand that their clients should source up to 70% of equipment from their country. She said Chinese investors make such unacceptable demands at a time when Iranian companies can acquire 80% of their required equipment from inside the country.

Iran earlier secured an investment agreement with Japan. This will potentially boost Japanese investments in Iran after the sanctions are lifted early next year, Reuters reported. Japan is reportedly eager to increase crude imports from Iran and invest in its resource projects.