Bank Mellat Enters Energy Financing

Bank Mellat Enters Energy FinancingBank Mellat Enters Energy Financing

Bank Mellat has signed an agreement with the National Development Fund of Iran (NDFI) to operate as its agent in three major energy projects, managing director of the bank announced Tuesday.

On account of its previous experiences in energy projects, the bank has been entrusted by the NDFI and the oil ministry to provide financial support for three projects previously assumed by the NDFI, Mohammadreza Saroukhani was quoted by IRNA as saying.

Development of Phases 20 to 24 of the South Pars gas field, with an estimated total cost of $5 billion, is one of the projects the bank has been assigned with. The project started two years ago, and half of the investment has already been provided. The remaining portion is to be allocated by the bank, the report added. The second project pertains to development of South Pars Phase 13, with its cost estimated at $2 billion. The agreement was signed following six months of extensive negotiations between the NDFI and the oil ministry. South Pars, covering an area of 3,700 square kilometers of Iran’s territorial waters in the Persian Gulf, is the world’s largest gas field shared between Iran and Qatar. It has a capacity of producing 820 million cubic meters (mcm) and 1 mcm of gas and gas condensates per day respectively.

Completion of Persian Gulf Star (in Persian: Setareye Khalij Fars) Refinery, in the port city of Bandar Abbas, is another project handed over to the bank. Around 600 million euros was previously allocated for the project by the NDFI. Iran is expected to reach self-sufficiency and start export of large volumes of petroleum products upon completion of the Persian Gulf Star Refinery in less than two years. The agreement between the bank, the ministry, and the NDFI was concluded last month. But the payment procedure is to be settled in the coming days, Saroukhani said. “A total of $884 million in finance is to be provided by the bank.”

Established in 1980, Bank Mellat is a private bank, and its term of activity is unlimited. Back in October, deputy oil minister, Kazem Vaziri Hamaneh, criticized the process whereby Iranian banks provide financial resources for the oil industry’s strategic projects, adding the oil ministry’s efforts to obtain banking resources for the Persian Gulf Star project have been to no avail.