Overseas LPG Reservoir Projects Unattractive

Overseas LPG Reservoir Projects UnattractiveOverseas LPG Reservoir Projects Unattractive

The Iranian Commercial Gas Company (ICGC) plans to build liquefied petroleum gas (LPG) reservoirs overseas while funding and execution of the project is expected to be undertaken by the private sector.

The ICGC, as a subsidiary of the National Iranian Gas Company (NIGC), plans to construct LPG reservoirs with the aim of facilitating export in targeted markets, including China, Oman, Indonesia, Philippines, and Vietnam. The project is deemed crucial and experts are currently conducting the feasibility studies. Currently preliminary surveys are being conducted and negotiations are already underway with private firms. Private companies, however, have taken divergent views on the matter.

"While Iran's oil, gas, and petrochemical sectors strive for domestic and foreign funding, Iranian firms should refrain from making huge investments abroad," Seyed Taghi Hejazi, managing director of Taghtiran Kashan Co. (TKC) told the Persian daily, Forsat-e-Emruz. "Priority should be given to the construction of LPG reservoirs in Iran," he said, also noting that some private firms nevertheless are willing to invest in foreign markets.

Given the huge investment required to construct LPG storage facilities abroad, the government should make necessary arrangements to facilitate private investment and increase the rate of return in the sector, Hejazi added.

Although managing director of the ICGC, Mohammad-Ali Barati, said last week that the ICGC is in talks with private firms for construction of LPG reservoirs overseas, Reza Abbaszadeh, managing director of International Petrosazeh Aram Company (IPS), said his company, as one of the few domestic manufacturers of liquefied gas storage facilities, has not been approached for any cooperation in foreign projects.

"Thanks to its expertise, the IPS has been in negotiations with China and Oman for construction of storage facilities, but if the ICGC proposes cooperation in foreign projects, the IPS would prefer to collaborate with the ICGC as such collaboration provides more security," Abbaszadeh said.

Domestic manufacturers of gas storage facilities have made much progress over the past years to the extent that "only Chinese companies are considered their competitors," he said, adding that in terms of final prices Iranian companies have outstripped European and Turk manufacturers in international tenders.

"Lack of success in previous projects in which the private sector had cooperated with state-owned companies has prompted private firms to find their own markets while disregarding the possibility of mutual cooperation with the public sector," Abbaszadeh said.

Iran's private sector has so far succeeded in gaining access to international markets, but startups still need government support to achieve success, Saeid Azizi, managing director of Tohid Sanat Alborz Manufacturing Co., said, noting that the investment required to build storage facilities differs for small and large companies.

"We are doing our best to attract private companies because we believe without their contribution such projects cannot be implemented," Barati said last week.