South Korea’s construction industry may be suffering at home but it bagged $5.3bn worth of petrochemical deals in Iran on Sunday, with a $2bn hydro scheme set to follow shortly.
The deals are a sign that close commercial ties existing between the two countries before sanctions were imposed on Iran are being restored.
The largest of the deals is Hyundai Engineering’s deal to build a $3.3bn petrochemical plant on the South Pars gas field, agreed with Iran’s Ahdaf Investment Company on Sunday, 12 March. Ahdaf is a subsidiary of the Petroleum Industry Pension Fund.
The Iranian oil ministry’s website reports that the deal took 18 months to negotiate.
The project includes four petrochemical plants and, according to Asghar Arefi, the managing director of Ahdaf, would be "one of the most lucrative projects in Iran". Altogether, they will have an annual production of 1 million tonnes of ethylene, 500,000 tonnes of mono-ethylene glycol, 350,000 tonnes of high-density polyethylene and 350,000 tonnes of low-density polyethylene.
The deal, known as Phase II of the Kangan Petro Refining Complex, will be carried out by Hyundai Engineering and its Hyundai E&C subsidiary as an engineer, procure, construct and finance contract, with funding to be arranged over a nine-month period by a consortium of Korean banks. Construction is expected to take four years.
Meanwhile, Daelim Industrial signed a $2bn agreement to improve refining facilities in Isfahan. This deal had been arranged at the end of December and signed formally on 12 March.
Business Korea reports that Daelim is also about to win a $2bn deal to construct the 1.5GW Bakhtiari Dam hydroelectric power plant in the Zargos Mountains in the southwest of the country. This will have a height of 325m, making it the tallest dam, with the second largest reservoir, in the world.
The string of wins reflects the close relations that South Korea’s construction industry had with Iran before the sanctions, and their speed in reopening offices once they were lifted. An official from contractor GS E&C told newspaper Dong-a Ilbo back in 2014, "Most of Iran’s strategic projects of building gas processing facilities in South Pars were granted to Korean construction companies. Iran is an important market for Korean firms."
In other news, Tass reports that Iran and Russia will sign "as soon as practicable" a €1.2bn deal to electrify the 495km northeastern rail link between Garmsar on the southeastern outskirts of Tehran and the town of Incheh Borun on the Turkmenistan border.
The line will speed the flow of goods, particularly grain and oil, between the former Soviet Central Asian republics bordering the Caspian Sea and the Persian Gulf.
A preliminary agreement was signed during a visit by Russian president Vladimir Putin to Tehran in November 2015.
Image: The signing ceremony held in Tehran on Sunday (Iranian Oil Ministry)