Sasol Exits Iranian Venture

To help clear a path for a planned $20 billion in investments in Louisiana, Sasol, the South African energy and chemical firm, has agreed to sell its stake in its Iranian joint venture, Arya Sasol Polymer Co. The venture, to be sold to a South African affiliate of an Iranian investor, had become legally risky for Sasol as U.S. economic sanctions have mounted against Iran over its nuclear program.

Sasol didn’t disclose the price of the transaction. It earlier valued the joint-venture stake at $223 million following a $191 million write-off of its worth.

Sasol formed Arya Sasol in 2003 with National Petrochemical Co. of Iran to build a chemical complex in the Persian Gulf province of Bushehr. The partners completed an ethylene cracker in 2007. Polyethylene plants followed in 2009.

Arya Sasol had been a solid performer for Sasol. In 2011, Sasol earned $45 million on $95 million in sales in Iran. Technical problems and a plunging Iranian currency pinched results in 2012, when Sasol brought in $17 million in profits and $43 million in sales.

But the partnership exposed Sasol to legal risk, particularly in the U.S. For example, the Iran Sanctions Act allows the President to impose sanctions on companies the Administration deems are helping Iran develop its oil and gas industry, something that Sasol has insisted it is not doing.

Sasol disclosed it would review the Iranian stake in November 2011, soon after it announced massive gas-to-liquids and ethylene projects for Louisiana. Together, the facilities could cost as much as $21 billion.

Mark D. Wallace, who served as a United Nations diplomat under President George W. Bush and now heads United Against Nuclear Iran, applauded Sasol’s decision. UANI had been pressuring Sasol to pull out of Iran, even erecting a billboard telling the company to choose between Iran and Louisiana.

“Companies that remain in Iran are risking serious financial and reputational harm and should not expect to be green-lighted for work in the U.S.,” Wallace said.

Sasol isn’t the first chemical firm to be taken to task over business entanglements in Iran. Huntsman Corp. ended sales to Iran in 2010. A year earlier, Lyondell­Basell Industries said it wouldn’t pursue new business in that country.