Japan's €230m L/C Likely for Iran Methanol Plant

Japan's €230m L/C Likely  for Iran Methanol PlantJapan's €230m L/C Likely  for Iran Methanol Plant

Japanese companies are likely to provide €220-230 million for a petrochemical venture, dubbed Veniran Apadana Methanol Project, in the southern port city of Asalouyeh, Bushehr Province.

Touraj Seyyed Arvanaghi, managing director of Veniran Apadana, said the Japanese finance would amount to around half of the costs of the new methanol plant, which is estimated at €462 million ($551 million), Shana reported on Wednesday.

Veniran Apadana is owned by Persian Gulf Petrochemical Industries Company.

According to the official, the payment would be made through a financing method known as usance letter of credit.

A usance L/C includes a date of repayment that is typically no more than six months from the date the L/C is issued, making it a useful financial tool for meeting short-term investments.

"If we secure the letter of credit, the project's development will shortly reach one-third of the way," Arvanaghi said.

"Veniran Apadan is seeking to produce 1.65 million tons of methanol a year for export to China and other parts of Asia."

Methanol is used as an anti-freeze and in feedstock to produce acetic acid and formaldehyde.

According to Shana, Japanese companies have opened close to €960 million worth of L/Cs since last year's lifting of sanctions for development projects in Iran.

In December, Japan's Itochu Corporation signed a deal to lend €320 million ($341 million) to PGPIC for infrastructure development.

PGPIC is Iran's largest petrochemical company with over 60 subsidiaries, owning more than 11% of Iran's capital market.

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