Iran and South Korea Sign 3 Billion Euro Petrochemical Contract

The South Korean engineering company Hyundai has signed a contract worth 3 billion euros for the development of the second phase of the Kangan petro-refinery with the Iran Goals Investment Company, a subsidiary of the Oil Pension Fund. According to the Shana news agency, affiliated with the Ministry of Oil, Asghar Arefi, the CEO of this company, stated at the contract signing ceremony that they have currently achieved over 30% progress in the first phase of this project, with nearly 120 million euros invested. He noted that financing for the second phase of the Kangan petro-refinery will be finalized within a maximum of 9 months, with 95% of the funding coming from South Korean banks, and it is expected to generate revenue after a 48-month construction period. Shana reported that Sang Rok Sang, the CEO of Hyundai Engineering, mentioned that the company has successfully executed mega gas and polymer refinery projects globally over the past 40 years and is committed to applying all its experience to successfully complete the second phase of Kangan. The second phase of the Kangan petro-refinery is set to produce one million tons of ethylene, 400,000 tons of high-density polyethylene, and 350,000 tons of low-density polyethylene annually, alongside phase 12 of South Pars. The construction of the first phase of this project, which currently has over 30% physical progress, has been initiated by the Goals Investment Company, which aims to produce ethane, propane, butane, and naphtha in this phase. Meanwhile, the Korean Times reported on Monday, March 13, that the value of the signed contract is 3.8 trillion won, equivalent to 3.2 billion dollars. The report adds that Hyundai Engineering is the first South Korean company to sign a large contract with Iran after the lifting of sanctions, and for this reason, Seoul has announced its support for this contract, with financial institutions guaranteeing the project's financing. The Korean newspaper added that negotiations between Iran and Hyundai began in August 2015, before the lifting of sanctions, and the company had continuously sent employees to visit projects in Iran. South Korea is the fourth largest buyer of Iranian oil. Iran states that it aims to triple its petrochemical production capacity to 180 million tons per year within the next 10 years. Developing the petrochemical industry requires 55 billion dollars in investment, of which 23 billion dollars is needed for the execution and completion of projects that must reach production within the next 5 years. One of Iran's hopes for investment was European companies, especially BASF of Germany, the world's largest petrochemical company, from which Iran intended to attract 6 billion dollars, but recently BASF announced that due to the uncertainty of the sanctions situation, it currently does not intend to enter Iranian petrochemical projects. Previously, the Chinese company CNTIC signed a contract with Iran to develop the petrochemical unit in Mehran County worth 1.65 billion euros, with the Chinese company's share of project financing being 85% and the Iranian side 15%. The significance of the petrochemical industry for Iran is highlighted by the fact that petrochemical products account for about one-third of Iran's total non-oil exports.