Sunday May 27, 2018

PetroEnergy Information Network

Monday / 1/22/2018 12:00:00 AM / 12:47
Service : Petrochemical - General
News Id : 280968
Reporter : 763
NPC Talks with Foreigners

Win-Win Game in Iran

(Monday, January 22, 2018) 12:47

TEHRAN, (Shana) -- The year 2017 was a tough one for Iran's petrochemical industry. Iran spared no effort to tempt back foreign investors that had been scared away from investing in Iran. In this year Iran sought to prove security of foreign investment and its mutual benefits.


The year 2017 was a tough one for Iran's petrochemical industry. Iran spared no effort to tempt back foreign investors that had been scared away from investing in Iran. In this year Iran sought to prove security of foreign investment and its mutual benefits. Increased petrochemical production and export and inauguration of new petrochemical projects bear proof to Iranian officials' assertions about this industry.

Reza Norouzzadeh, CEO of Iran's National Petrochemical Company (NPC), said Iran sought, in 2017, to encourage foreigners to invest in Iran's petrochemical sector.

"Alongside attracting foreign investment, we are seeking to use modern technologies in the development of petrochemical industry," he said.

Norouzzadeh said foreign investors had been coming to Iran in the wake of signature of Iran's landmark nuclear deal officially known as the Joint Comprehensive Plan of Action (JCPOA) with six world powers in 2015.

"We are in talks with renowned companies for investment," he added.

Iran's full compliance with the JCPOA has neutralized US President Donald Trump's threats to penalize foreign companies willing to invest in Iran.

As Iranian officials have indicated, no negative feedback has been seen in the talks between Iran's petrochemical industry and foreign companies.

Iranians have learned to turn threats into opportunities. Startup of numerous projects in South Pars gas field and inauguration of petrochemical projects during years of sanctions are cases in point. So far, 11 memorandums of understanding and agreements have been signed with foreign companies in petrochemical sector. France's Total, Germany's Linde and BASF, France's Air Liquide, Royal Dutch Shell, Japan's Sojitz Corporation, South Korea's Hyosung and China's Hui Xiang have signed MOUs with the NPC. Furthermore, two financing agreements have been signed with Japan's Itochu and Marubeni.

Iran faces no restrictions in negotiations with foreign companies, but Zionist regime companies are the only redline in economic talks.

Hossein Ali-Morad, director of foreign investment at NPC, said: "We hope that in the early 2018, we would sign foreign direct investment with [renowned European firms]."

If an agreement is reached, European companies will participate in a petrochemical project in Iran.

Iran Petchem Potential

Ali-Morad said the major challenge faced by the NPC in 2017 was to promote Iran's petrochemical industry in the world, following the removal of sanctions.

"Unfortunately sanctions caused foreign companies to leave Iran and remain unaware of strategies of development in Iran," he added.

The sanctions slowed down the trend of development of petrochemical industry, but this move was never halted.

The implementation of the JCPOA opened doors to foreign investment and negotiations with foreign companies were held in rapid succession. However, the main point is that many companies were unaware of growth and development of Iran's petrochemical industry during years of sanctions.

"Many foreign companies wanted us to introduce our strategies for development of petroleum industry, particularly petrochemical sector, and our development plans in this sector to them. It took us a long time," said Ali-Morad.

He said the NPC had been quite successful in doing so, expressing hope that the endeavors made in 2017 would come to fruition next year.

"We hope that in 2018 foreign companies, having got familiar with Iran's petrochemical sector, would directly invest in Iran's petrochemical industry, and leading European banks and top international institutes would effectively contribute to financing projects," he added.

Int'l Firms Ready to Invest in Iran

Ali-Morad said this year, leading foreign companies like Shell, BASF, Total, Air Liquide and Linde expressed their readiness for contributing to the development of Iran's petrochemical industry. "That shows the attractiveness of the industry for foreign investors," he said.

Iran's sixth Five-Year Economic Development Plan stipulates that Iran's petrochemical industry needs around $40 billion in investment for development. Foreign financial institutes and European banks are expected to make contribution.

For this reason, NPC officials have been attending international seminars in order to introduce the projects of this industry and promote Iran's petrochemical industry.

Iran hopes to encourage foreign investors to bring cutting edge technologies into Iran and convince foreign banks to finance petrochemical projects.

Investment and financing of projects are two separate issues. In the financing of projects, after banking facilities and loans are granted to applicants, the loans would be reimbursed from revenues of projects. But when investment is at stake, companies are directly involved in funding or operating projects.

Ali-Morad said Chinese companies had expressed willingness to finance Iranian petrochemical projects due to the profitability of projects and assurances about the repayment of loans.

"Although the US has yet to respect its obligations under the JCPOA European companies have shown stellar performance. That is why banking relations between Iran and foreign countries are growing from day to day."

Ali-Morad expressed hope that a consortium of European banks and international financial institutes would be established in 2018 to finance one petrochemical project.

"If that comes true, it could be the starting point for the financing of petrochemical projects in Iran," he said.

Request for Investment in Iran Petchem

Ali-Morad said number of requests for direct investment in Iran's petrochemical industry was increasing.

"Due to their assurance about the NPC, foreign companies are willing to have this company as partner in their projects. Meantime, we are willing for Iran's private sector to be involved in the projects and have a prominent role. That is why we are witnessing long drawn-out talks between foreign companies and the private sector," he added.

"For example, two renowned foreign companies that are willing to invest in industrial gas production in Assaluyeh and new zones like Qeshm and Parsian believe that NPC partnership with them would be an advantage that would reduce risks," said Ali-Morad. "But we still insist that foreign companies negotiate with Iran's private sector. We are trying to remove barriers and bring these companies closer to the private sector, and the NPC would make planning and detect the development of industry. However, foreign companies see the state sector's presence the key to development."

From Far Asia to America

Access to low-cost feedstock, access to high seas, specialized manpower and low-cost workforce are among advantages of Iran's petrochemical industry that help reduce the cost price of petrochemical products in Iran. This advantage has been taken into consideration by investors.

Ali-Morad said surveys by the NPC and European companies had found that Iran was the only country in Asia to have access to proper feedstock. "In light of neighboring countries, Iran is also faced with a growing market and it can help attract foreign investment." 


Courtesy of Iran Petroleum