Sasol Eying Return to Iran

Sasol Eying Return to IranSasol Eying Return to Iran

Sasol, the world’s biggest coal-to-gasoline producer, has expressed willingness to return to Iran's petrochemical industry, deputy oil minister in petrochemical affairs said.

"The recent plunge in oil prices has rendered gas-to-oil products projects in North America economically unviable. Therefore, the South African company is seeking to return to the Iranian market, given its previous experience in Iranian projects," Abbas Sheri-Moqaddam was quoted as saying by ISNA.

To help clear a path for a planned $20 billion in investments in Louisiana, Sasol, the South African energy and chemical firm, has agreed to sell its 50% stake in Arya Sasol Polymer Co. to Main Street 1095 Ltd., a South African subsidiary of an Iranian investor, in August 2013. Since then, Sasol had no ongoing investment in Iran.

Sasol formed Arya Sasol in 2003 with the National Petrochemical Company of Iran to build a chemical complex in the Persian Gulf province of Bushehr. The partners completed an ethylene cracker in 2007. Polyethylene plants followed in 2009.

Arya Sasol had been a solid performer for Sasol. In 2011, Sasol earned $45 million on $95 million in sales in Iran. Technical problems and a plunging Iranian currency pinched results in 2012, when Sasol brought in $17 million in profits and $43 million in sales.

But the partnership exposed Sasol to legal risk, particularly in the US, where the US Administration has the authority to impose sanctions against companies it deems are helping Iran develop its oil and gas industry.

Sasol wrote down the value of Arya by 1.97 billion rand ($195 million) for the second half of 2012 on Feb. 8, and impaired it by a further 1.6 billion rand by June 30, cutting the carrying value of Arya to 2.3 billion rand, it said in August 2013.

The ninth olefins complex, constructed by Arya Sasol at a cost of €1.350 billion, is located in Pars Special Economic Energy Zone, in Asaluyeh.

"NPC's priority is to attract foreign investment for petrochemical projects, because the funds available at the National Development Fund of Iran are to be utilized for other development projects across the country," Sheri-Moqaddam said.

"Investment in Iranian projects would generate higher profits for the South African company."