Utilizing Iranian expertise and importing technology are prerequisites of financing petrochemical ventures, the National Petrochemical Company’s deputy for investment said.
“Chinese investors have been briefed on exploiting domestic technical potentials and using local manufacturers’ capacity while implementing the projects,” Hossein Alimorad was also quoted as saying by IRNA.
According to the official, negotiations are underway with Chinese enterprises, but as long as the outlined conditions are not met, there will be no agreement.
“Chinese financiers should not impose any restrictions on domestic contractors regarding equipment,” he said, adding that tools and machinery should be allowed to be purchased from all over the world and not just from China.
Alimorad noted that local producers ought not to limit themselves to China and take advantage of European equipment.
The official believes that indigenizing petrochemical equipment and services can play a key role in reducing reliance on foreign technical know-how in the long run.
Asked about domestic firms’ share in undertaking joint ventures, Alimorad said, “Everything depends on our capabilities: the higher our capacities, the bigger stake we can hold.”
Underlining Iran’s high engineering capacity, Alimorad added that while negotiating, Chinese investors are well-informed that a part of manufacturing and installation process should be carried out with the help of Iranian experts.
“Most of the credit lines to finance projects in Iran are opened in the petrochemical sector,” he said, adding that not only is funding such initiatives profitable, but they also help the country generate more revenues.
Lordegan Complex
According to Alimorad, Lordegan Petrochemical Complex is the latest funded development project expected to go on stream by March 2019.
The project includes the construction of urea and ammonia units of Lordegan Petrochemical Plant in the city of Lordegan in Chaharmahal-Bakhtiari Province.
Access to natural gas and water resources, as well as its suitable location, has given the project an added advantage.
“The Lordegan project faced serious challenges for 10 years. However, concerted efforts have been made in the past few months to follow the schedule and the overall trend of progress is promising,” he said.
Suitable Terms
According to Asadollah Asgaroladi, the chairman of Iran-China Chamber of Commerce, China’s financing terms for Iran’s energy and petrochemical projects are suitable, as they offer loans to finance projects at an interest rate of 6-12%.
“The central banks of Iran and China have taken effective measures to boost financial and banking ties and ease Chinese investments in the country,” he said.
The official said Tehran and Beijing reached an agreement to jointly fund Iranian development projects backed by the two governments, with Chinese investors to provide 85% of funds and the rest to be sourced through the Central Bank of Iran.
He added that in the past several years, Chinese companies have played a major role in Iran’s petrochem sector and there is a huge ground for collaboration with China in Iran’s key petroleum industry.
Asgaroladi believes that China can help Iran in terms of financing and supplying equipment, “but Iran is ahead of China in terms of engineering and technical know-how”.
Chinese companies have played an increasing role in Iran’s quest to reform its energy and petrochemical sectors, revamp aging refining facilities and expand oil and gas transfer and export infrastructure.
China’s Petroleum and Chemical Corporation, also known as Sinopec, finalized a contract to expand Abadan Oil Refinery in the southern Khuzestan Province.
The first phase of the project, worth $1.2 billion, is to be financed by China’s Sinosure, the country’s state-owned export credit agency. In 2017, Iran and China signed a finance deal worth $10 billion for water management, energy, environment and transport projects.
Officials say China accounts for nearly 40% of Iran’s petrochemical and 70% of polymer exports.
The world’s biggest energy consumer is also the top customer of Iranian crude oil, ahead of India, Japan and South Korea.
