Italians in Talks to Build Refinery in Iran

Italian oil and gas servicing companies, Saipem and Tecnimont, are planning to build a 120,000-barrel per day gas condensate refinery in Fars Province, the managing director of Ghadir Investment Company said.

“Tecnimont and Saipem have signed a preliminary agreement to build Pars Refinery. The deal is due to be finalized in the near future,” Gholamreza Soleimani was quoted as saying by IRNA on Tuesday.

Tecnimont S.p.A. provides engineering, procurement, and construction services to oil and gas, petrochemical and chemical industries. As of 2005, Tecnimont S.p.A. operates as a subsidiary of Maire Tecnimont S.p.A.

Saipem is a subsidiary of Italian energy company Eni, which owns approximately 30% of its shares. Saipem has been contracted for designing and constructing several pipelines, including Blue Stream, Greenstream, Nord Streamand South Stream.

A general agreement has been reached with Saipem, but negotiations are underway with Tecnimont to thrash out the terms and conditions of cooperation, the official noted.

Underscoring that €750 million ($810 million) will be invested to construct the refinery, he said that 85% of the funding will be provided by the Italian companies and the remainder by Ghadir Investment Company.

Ghadir Investment Company is the largest investment company listed on the Tehran Stock Exchange, which, through its seven holdings and 140 subsidiaries, operates in various sectors such as oil, gas, petrochemicals, building construction, mines and related industries, transportation, power and energy, financial and commercial activities as well as information technology.

Soleimani noted that land has been allocated for the refinery site, however, environmental permits have not yet been obtained. According to reports, Iran's nine major refineries process around 1.8 million barrels of crude oil per day.

Iran plans to raise its refining capacity to 3.2 million barrels daily by attracting $14 billion in investment over the next four years, most of which is due to be provided by foreign financiers.

In addition to building new refineries, the existing units with old technology and aging facilities are planned to be renovated.

Abbas Kazemi, managing director of National Iranian Oil Refining and Distribution Company, has said that several Japanese and South Korean companies are in talks with NIORDC on investment in Iran's refinery rehab programs.

According to IRNA, Iran ranks ninth and 13th in the world in terms of gasoline and diesel production respectively. It is also the world’s third largest producer of mazut-- a low-quality heavy and highly polluting fuel-- which indicates low efficiency in domestic refineries.