Code: 541597 A

Western and Asian companies are edging closer to new deals with Tehran, which could see them spend over $10 billion on Iranian petrochemical ventures, supporting the country’s vision to double its petrochemical production capacity in half a decade.

“Total, one of the top five oil and gas companies in the world, has voiced its interest in Iran’s petrochemical industry after sealing a $5 billion deal” to develop a gas project in the Persian Gulf, Moayyed Hosseini, an adviser to Oil Minister Bijan Namdar Zanganeh on petrochemical affairs, was quoted as saying by Mehr News Agency on Thursday.

“Technicalities of some $11 billion worth of foreign finance across the petrochemical sector are being ironed out … The petrochemical investment deal [with Total] is in the final stages and will be signed soon,” he added.

The French company signed a deal in July to develop Phase 11 of Iran’s South Pars Gas Field that it shares with Qatar, becoming the first top-tier European firm to enter the country’s energy market after sanctions over Tehran’s nuclear program were lifted last year.

Total has reportedly reached a preliminary agreement to build three petrochemical plants in Iran with a total capacity of 2.2 million tons in an investment that could be worth up to $2 billion.

The world’s fourth-biggest oil and gas company can play a central role in completing Persian Gulf Bid Boland Refinery, a drawn-out project in the southern Khuzestan Province whose construction began 15 years ago.

Mahmoud Aminnejad, director of the refinery project, said last month that Total was in talks on transferring the know-how for propane dehydrogenation–an advanced step in the production of propylene from propane.

Hosseini added that Germany’s BASF and Linde and a Japanese company are among other potential investors in Iran’s petrochemical sector. The Japanese firm is believed to be Sojitz Corporation that signed a preliminary deal to invest €1 billion ($1.06 billion) in a methanol-to-propylene plant in Iran.

Investment Plans

Oil- and gas-rich Iran is looking to secure an array of foreign investments to push petrochemical output capacity from 60 million tons to more than double that amount by 2022, the end of its Sixth Five-Year Economic Development Plan, and raise its stake in the regional market to over 40% from less than a quarter now.

Tehran says its new petrochemical ventures require over $70 billion in investments that should mostly come from foreign sources.

The Oil Ministry adviser said Iran is offering incentives for investment in its special economic and energy zones that should be alluring to foreign financers.

Moayyedi said the ministry has mapped out 20 locations, mostly across the Persian Gulf shores in the south, for generating 60 million tons in new petrochemical output capacity.

The measure, coupled with Saudi Arabia’s declining gas resources that serve as the building block of many petrochemicals, could place Iran in the driving seat of some of the Middle East’s largest petrochemical expansions, according to the official.

“Considering the drop in Saudi natural gas reserves, Iran is one of the safest bets in terms of sustainable supply of gas feedstock for petrochemicals,” Moayyedi said.

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