An unnamed South Korean company is in negotiations to finance a major refinery project in Isfahan Province, executive director of National Iranian Oil Engineering and Construction Company said.
"A Korean refiner is willing to finance RFCC units of a new refinery in Isfahan … Construction will shortly take off if the two sides reach an agreement," Hamid Sharif-Razi was quoted as saying by Shana on Sunday.
The complex is estimated to cost nearly $2 billion to be built and the investment will be returned from the sales of the refinery's products.
RFCC or residue fluid catalytic cracking is one of the most important conversion processes in petroleum refineries. An RFCC unit converts different blends of crude oil to more valuable products such as gasoline and olefins.
According to Sharif-Razi, the installation of RFCC units is cost-effective and will significantly reduce the output of mazut, a highly polluting petroleum product, in oil refineries.
Oil talks with potential South Korean partners are in line with Iran's commitment to boost crude production capacity by 1 million barrels a day within six months.
To raise output, the country needs to inject billions of dollars to revamp and expand its aging crude processing and production infrastructure and make up for years of underinvestment.
Iran was OPEC's second-biggest producer of Organization of Petroleum Exporting Countries in 2011 after Saudi Arabia, but was relegated to fifth place after financial and trade embargos cut its crude exports to little more than 1 million bpd from around 2.6 bpd.
Data show Iran's oil exports will rise by more than a fifth in January and February from last year's daily average. The country's overall exports will total around 1.44 million barrels a day in February and about 1.5 million bpd in January, according to the data on Iran's preliminary tanker loading schedules.
Tehran and Seoul are fast expanding economic ties after Iran and six world powers (the five permanent members of the United Nations Security Council plus Germany) reached a landmark agreement in July on limiting Iran's nuclear program in exchange for some sanctions relief.
Shortly after the US and the European Union lifted decades-old sanctions against Iran on Jan. 16, government officials said South Korea will be one of the several customers of Iran's crude, which will improve its oil deal with the Persian Gulf country when its current contract runs out in April.
The East Asian state imports around 110,000 barrels of oil a day from Iran, but the volume is set to rise. Their combined imports in 2011 reached 87.18 million barrels worth $9.2 billion, but tumbled to 44.92 million barrels worth $4.5 billion in 2014.
In August, Oil Minister Bijan Namdar Zanganeh discussed cooperation in oil extraction, liquefied natural gas production and petrochemical projects with South Korean Minister of Land, Infrastructure and Transport Yoo Il-ho.
South Korea's conglomerate Hyundai Group and electricity giant KEPCO are also exploring joint ventures in Iran.
In September, KEPCO officials mulled over building a 1,000-megawatt power plant in southern Iran. A preliminary agreement was reached with Hyundai to establish a joint venture for investment in energy projects in Iran and its neighboring countries.
