Total, PGHC to Finalize Feasibility Studies Deal

The Persian Gulf Holding Company is poised to sign an economic feasibility studies agreement with French energy major Total S.A. for a joint petrochemical venture in the next few weeks.

"The deal, planned to be finalized in about a month, will allow a third-party company to conduct studies to pave the way for clinching a final contract," Hossein Alimorad, director of investment at the National Petrochemical Company, was cited as saying by Shana on Wednesday.

According to Alimorad, the in-depth survey will determine whether investing in such a collaborative venture under the current circumstances in Iran is financially viable.

The assessment will also provide an estimate of how long it could take for the prospective petrochemical venture to reach full operating capacity and produce maximum profit.

Highlighting the effect of different variables on investors' final decision, the official said, "Preliminary economic feasibility studies are aimed at providing the two firms with accurate information to help them prevent a leap in the dark."

Reportedly, Total has reached a preliminary agreement to build three petrochemical plants, with a total capacity of 2.2 million tons in a deal that, if finalized, could see the French oil major invest up to $2 billion in Iran.

According to Adel Nejad-Salim, managing director of Persian Gulf Petrochemical Industries Company, serious talks are underway with two multinationals, one of which is Total, to attract $9.5 billion in investment for commencing petrochemical joint ventures.

The official believes that as long as mega petrochemical ventures are not internationally funded, government and non-government bodies cannot help the potentially lucrative industry flourish.

Asked about cooperation with Anglo-Dutch major Royal Dutch Shell, Alimorad said a joint workgroup will carry out feasibility studies on cooperative ventures in Iran in the near future.

Reportedly, Shell signed an agreement with the National Iranian Oil Company last year on expanding cooperation in the key petrochemical industry.

Shell has reportedly agreed to invest $350 million in a major petrochemical project in Hamedan Province, but analysts say its venture in Iran's petrochemical sector could soar to as much as $6 billion.

According to Marzieh Shahdaei, chief executive officer of NPC, Iran's petrochemical output is forecast to reach 60 million tons in the fiscal 2017-18, nearly 20 times more than its production level after the 1979 Islamic Revolution.

Nominal production capacity is slated to reach 72 million tons annually upon the launch of new petrochemical ventures over the next six months.

The government is eager to renovate petrochemical facilities and attract know-how in Asalouyeh and Mahshahr, two southern cities along the Persian Gulf coasts housing Iran's largest petrochemical plants.