The lifting of international sanctions on Iran in the spring of 2016 kick-started negotiations between Iranian authorities and a slew of western and Asian firms interested in establishing petrochemical ventures in the country. Deals are likely because Iran has some of the largest reserves of oil and gas anywhere in the world but little cash.
The sanctions, imposed in response to Iran’s nuclear program, left the country’s petrochemical industry in tatters. Iran is now seeking between $7 billion and $10 billion in foreign investment. That amount would enable it to produce chemicals worth $70 billion per year within two decades, claims Iran’s National Petrochemical Co. (NPC).
In the past year, companies including Air Liquide, BASF, Linde, Shell, Total, and Mitsui & Co. have entered discussions with Iranian authorities about creating joint-venture companies. Recently, however, BASF Chairman Kurt Bock downplayed comments by NPC that the German company may invest $4 billion in an Iranian chemical project.
“Maybe we can reestablish our business in Iran, but it remains to be seen,” Bock said. It all depends on the political situation in Iran. “But many banks will not lend for projects in Iran, so that is a bottleneck going forward.”
Still, some deals are already being made, including a $1.1 billion agreement between Italian engineering firm Maire Tecnimont and Persian Gulf Petrochemical Industries Co. to build refineries and petrochemical plants in Iran. In recent weeks, Shell signed a letter of intent with NPC to “explore areas of cooperation.”