A consortium of South Korean companies are negotiating to invest in a petrochemical project in the city of Masjed Soleyman in southern Khuzestan Province, member of the board of Masjed Soleyman Petrochemical Industries Co. (MIS) said.
"We are planning to turn the rural district of Zilaei (in Masjed Soleyman) into a major petrochemical hub in Khuzestan," Ali Seifian was quoted as saying by Shana on Tuesday.
MIS has finalized a memorandum of understanding with the South Korean consortium on building a petroleum refinery and its affiliated units for marketing and distribution of petrochemicals, the official said.
The project is estimated to cost $1.5 billion, but financing can be raised to $5 billion. The new unit is planned to be established near the site of a major petrochemical complex which is under construction in the oil city of Masjed Soleyman, Seifian added.
"Zilaei has attracted the interest of multinationals with its huge potential to transform into Khuzestan's second energy hub after Mahshahr Special Petrochemical Economic Zone. The two sides are waiting for the agreement to be signed after South Korean companies obtain financing permits from their government."
The official underlined Masjed Soleyman as an attractive place for investment in petrochemicals due to the easy access to feedstock.
The first oil exploration in Iran and the Middle East was carried out in Masjed Soleyman more than century ago. The exploration substantially changed the economic dynamics of the region and turned the city into a major area of interest for western companies and countries that sought a share in Iran's oil industry.
Iran has been promoting foreign investment in its burgeoning petrochemical sector after international restrictions imposed over the nuclear dispute were lifted in January.
In an international conference in Tehran last year, state-run National Petrochemical Company envisaged plans to attract $70 billion in foreign investment in the petrochemical market that was largely shut to outsiders over the past few years.
It also plans to raise petrochemical output to 180 million tons a year by 2025, nearly three times the current level.
Recent political and economic openings have reignited the interest of Europeans, particularly German heavyweights, in Iran's petrochemical industry.
Germany's Abels Decker Kuhfuss Lenzen (ADKL) signed a memorandum of understanding in Tehran in May, worth a total of $11.1 billion (€10 billion), to facilitate German investment and transfer of technology in Iran's petrochemical projects under engineering, procurement, construction and financing contracts. According to the agreement, Iran will receive €2 billion as the first tranche of German finance in its petrochemical sector.
BASF SE, the world’s biggest producer of chemicals based in Germany, has signed an MoU, worth €6 billion, to construct a large petrochemical complex in Phase 2 of South Pars Gas Field in Asalouyeh. The German major has also opened an office in Tehran.