BASF, Iran Close to $6.8b Petrochem Deal

BASF, Iran Close to $6.8b Petrochem DealBASF, Iran Close to $6.8b Petrochem Deal

The final round of negotiations to sign an agreement worth $6.8 billion with Germany's BASF for building a petrochemical complex in Iran will be held soon.

“An (unnamed) Iranian petrochemical company and Germany's BASF have almost finalized the agreement to launch the commercial venture worth $6.8 billion in Asaluyeh, southern Iran,” Parviz Sahafzadeh, deputy head of Iran's Association of Petrochemical Industry Corporation, told Mehr News Agency.

According to the official, the contract calls for constructing a petrochemical complex in Asaluyeh's Phase 2, whose major output is ethylene and different grades of polyethylene.

"Based on preliminary agreements, a part of manufactured materials will meet Iran's domestic needs and the rest will be exported to international markets," he said.

 Pointing to ongoing talks, the official noted that the two sides are trying to resolve issues like the price of natural gas as feedstock as well as the construction of value-added processing units. As soon as the disagreements are dealt with, the contract will be signed.     

Highlighting the readiness of France's Total to build another petrochemical company in the south, he said, "It seems as if Total and BASF will play a pioneering role in developing Iran's petrochemical industry."

Sahafzadeh believes that oil giants such as BP, Royal Dutch Shell and Total not only have been among major players in the global oil industry's upstream sector, but also contributed to Iran's petrochemical sector in the past.

"Having access to huge natural gas reserves, sharing a coastline with the Persian Gulf and the Oman Sea and being located in the vicinity of international markets have given the state a competitive advantage to encourage foreigners to transfer their cutting-edge technology to Iran," he said.

According to Marzieh Shahdaei, managing director of National Petrochemical Company, some 14 petrochemical projects are to go on stream in the current Iranian year (started March 20), which will raise Iran’s overall petrochemical output by about 7 million tons.

The completion of 55 semi-finished petrochemical plans is another priority of NPC.

The official stressed that negotiations with foreign companies on transferring technology and upgrading Iranian complexes are underway.

Iran aims to sell 93 million tons of petrochemicals worth $61 billion under the sixth five-year development plan (2016-21). In line with the plan, petrochemical projects, worth $37 billion, have been offered to foreign and domestic investors.

Petrochemical products are Iran’s second biggest source of income after crude oil, but officials are confident that Iran can earn more from petrochemicals than it makes from oil. More than 46 million tons of petrochemical commodities were produced in the last Iranian year (ended March 19, 2016), of which 19 million tons worth $9.5 billion were exported.