Daelim of South Korea Cancels $2 Billion Contract with Iran

Daelim Industrial Company of South Korea announced on Friday, June 1, that it has canceled its $2 billion contract with Iran related to a refinery project. According to a report by Reuters, the company cited the Iranian side's inability to secure funding for the development of the Isfahan oil refinery facilities as the reason for the contract cancellation, which is itself a result of the re-imposition of U.S. economic sanctions against Iran. Daelim won the $2.08 billion contract in January 2017 for the improvement and development of the Isfahan oil refinery, which at that time Iranian news agencies reported as the largest construction project undertaken by a South Korean company in Iran. The Isfahan oil refinery has a production capacity of 375,000 barrels of oil per day and currently supplies about 22% of Iran's oil production. Last winter, Daelim announced that it would complete the improvement and development project of this refinery by the end of 2020. However, following the U.S. withdrawal from the nuclear agreement and the return of sanctions against Iran, this is not the only economic project that is being canceled. On Friday, the American newspaper Wall Street Journal reported that General Electric Company will also end its sales of oil and gas-related equipment to Iran in the coming months. This multinational company, headquartered in the U.S., intended to invest $150 million in pipeline and compressor equipment in Iran following the nuclear agreement and was negotiating with Iranian producers to manufacture energy-related equipment, but ultimately decided to cancel all these plans. The report states that General Electric's subsidiary companies have informed Iranian parties not to place any orders for dates after November 4. November 4 is the deadline set by the U.S. for the re-imposition of sanctions against Iran.