Europeans Eager About Iran Petrochemical Projects Despite US Sanctions

Iran is in negotiations with Germany’s BASF SE, the world’s largest chemical producer.Iran is in negotiations with Germany’s BASF SE, the world’s largest chemical producer.

Despite the enforcement of new US sanctions against Iranian individuals and entities,  negotiations are underway with major European firms from France and Germany on developing the key petrochemical sector, says the head of financial affairs of the National Petrochemical Company. 

"The latest sanctions have had no effect on ongoing talks between NPC and international petrochemical giants to attract investment," Hossein Alimorad was quoted as saying by Mehr News Agency on Saturday.

US President Donald Trump on Friday imposed new sanctions on 25 Iranian individuals and entities that it said were related to the country's missile program. 

Those affected under the sanctions cannot access the US financial system or deal with US companies and are subject to secondary sanctions, meaning foreign companies and individuals are prohibited from dealing with them or risk being blacklisted by the United States.

Highlighting NPC policies to win the trust of international investors not only in joint ventures but also transfer of technology, Alimorad said the multinationals have not had a change of heart about doing their share in developing Iran's rapidly emerging petrochemical industry.

He referred to French Foreign Minister Jean-Marc Ayrault's visit to Tehran this week at the head of an economic delegation, including representatives from oil giant Total S.A., and said talks were held with Total on plans to build a petrochemical complex to produce 300,000 tons of polyethylene in Parsian Special Economic Zone in south Iran.

Patrick Pouyanne, the chief executive officer of Total said on Thursday the French energy major is not worried about its deal with Iran amid reports that Total has resumed operations in Iran's South Pars Gas Field megaproject.

The "French supermajor is ready to finance Iranian oil projects and transfer technology to Tehran. We pledged that Total will introduce cutting-edge drilling and extraction technologies to slash production costs at Iran’s oil and gas fields," Pouyanne said. He went on to say, "If there is a change in the deal, worth $4.8 billion, to develop Phase 11 of the South Pars that was signed in November, we will be obliged to obey, but as of today, we are moving ahead."

German Interest

According to Marzieh Shahdaei, NPC's managing director, the company is in negotiations with Germany's BASF SE, the world's largest chemical producer.

"Negotiations are expected to result in signing an agreement soon," she said.

"Energy giants including Wintershall Holding GmbH, Germany's largest crude oil and natural gas producer, and BASF, have offered to invest a total of $12 billion in Iranian oil and petrochemical sectors," Shahdaei said, 

According to published reports, BASF has proposed to invest $6 billion in a petrochemical plant in the southern regions. 

Shahdaei added that German banks have proposed to finance two NPC projects and then start talks with the private sector.

The official believes that if Germany's top credit institution Euler Hermes agrees to establish a credit line worth €100 million, it would pave the way for other investors and financial institutions to resume dealing with Iran.

Reportedly, Iran wants to attract $72 billion in foreign investment for 80 petrochemical projects that should be developed under the sixth five-year economic development plan (2016-21).

Iran's petrochemical production capacity is around 65 million tons a year. Tehran hopes to boost that capacity to 130 million tons a year by 2020. 

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