Spain’s SERCOBE Discusses Petrochem Financing

Spain’s SERCOBE Discusses Petrochem FinancingSpain’s SERCOBE Discusses Petrochem Financing

A Spanish firm, SERCOBE, is holding a new round of negotiations with Iran to become the first European firm to finance an Iranian petrochemical project in the post-sanctions era.

Following the launch of negotiations with the largest Spanish oil company Repsol and delivering the first oil cargo to the country’s Cepsa, countdown is on for the first European financing in the Persian Gulf country’s petrochemical sector, Mehr News Agency reported.

SERCOBE, or the National Association of Manufacturers of Capital Goods, represents more than 400 companies and special groups in the fields of design, engineering, production, maintenance, installation and recycling.

Within the past few months, the Spanish firm has, for the second time, been in talks with the National Petrochemical Company on financing Damavand Petrochemical Complex that is Iran’s biggest provider of services in petrochemical industry in Asalouyeh.

Marcel Riudavets Slangen, SERCOBE‘s export manager, has recently voiced the company’s readiness to finance Damavand for long-term and expressed optimism that talks with the Iranian side will yield fruit.

Amir-Hassan Fallah, NPC’s deputy for finance and investment development, said Damavand Petrochemical Complex is in the process of privatization.

Fallah, who has participated in negotiations with SERCOBE, added that privatization of the complex is not an impediment to an agreement with the Spanish company, but SERCOBE has to cooperate with the new owner of the complex.

The two countries have also negotiated on the construction of an oil refinery.

“Madrid is mulling over a plan to build an oil refinery in cooperation with Iran,” Jose Manuel Garcia-Margallo, Spain’s minister of foreign affairs and cooperation, recently said in a statement.

According to an NPC report, the Persian Gulf country aims to sell 93 million tons worth $61 billion of petrochemicals under the sixth five-year development plan (2016-21).

In line with the plan, several petrochemical projects, worth $37 billion, have been offered to foreign and domestic potential investors. Petrochemical products are Iran's second biggest source of income after crude oil, but officials are confident that the Persian Gulf country can bring in more money from petrochemical products than it makes from oil.

Nominal production capacity currently stands at 60 million tons a year, but plans call for doubling the volume by 2021 and raising the output to an ambitious 180 million tons a year by 2025.

To fulfill this ambitious goal, Tehran hopes to raise $70 billion in petrochemical investment over the next 10 years.