Daelim Revokes Agreement With Iranian Oil Company

Isfahan Oil RefineryIsfahan Oil Refinery

Daelim Industrial Company, a major South Korean construction firm, has canceled a construction deal worth 2.2 trillion won ($2 billion) with an Iranian oil refining company in the wake of the United States' renewed sanctions against the Middle Eastern country, the firm said on Friday. The South Korean firm disclosed the cancellation of the deal with Isfahan Oil Refining Company in a report to the financial watchdog Financial Supervisory Service, Korea Herald reported.

The deal, signed in March last year, was designed to renovate and expand the facilities of Iran's refinery in Isfahan, located around 400 kilometers south of Tehran.   

The canceled deal was worth $2 billion, which accounts for nearly 24% of Daelim's annual sales as of 2015.

"(The deal) was canceled after fund-raising was not completed because of worsening external conditions, including economic sanctions on Iran," the South Korean company said.

Daelim said fund-raising was a prerequisite for the deal to go through. It had been in touch with domestic and foreign financial companies to finance the construction project, but the financial firms reportedly decided not to finance it in the face of the recent US sanctions on Iran, including economic sanctions.

The cancellation would only have limited impact on the company's business prospects, Daelim added.

US sanctions against Iran are also expected to affect an Iran construction deal with Hyundai Engineering Company.

Hyundai Engineering finalized the deal, worth 3.8 trillion won with Ahdaf Investment Company in March, last year to construct a refining complex in Iran. It was reported to be the biggest construction deal that a South Korea company has clinched in the Middle Eastern country.

It is currently "in discussion with the Iranian side on whether to proceed with the business", the company said.


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