LONDON (Reuters) - Total (TOTF.PA) and Iran have reached a preliminary agreement to build three petrochemical plants in a deal that if finalised could see the French oil major investing up to $2 billion (£1.5 billion) in Iran, an Iranian oil industry official said on Tuesday.
“In the latest talks, the two sides have reached agreement for construction of petrochemical plants with the total capacity of 2.2 million tonnes of petrochemical and polymer products per year,” the managing director of Iran’s National Petrochemical Company (NPC) was quoted as saying by the oil ministry’s news agency SHANA.
“We predict that Total would invest $1.5 to $2 billion in Iran’s petrochemical industry if we reach final agreement,” Marzieh Shahdaei added.
A spokesman for Total said: “Total and Iran’s National Petrochemical Company are currently working on an in-depth study of an ethane-based petrochemical project whose figures (Capex especially) have to be fine-tuned.”
The preliminary deal on the petrochemical plants follows Monday’s agreement by Total to go ahead with the phase 11 development project for Iran’s South Pars offshore gas field, the first major Western energy investment in the Islamic Republic since the lifting of sanctions against it.
Total’s Chief Executive Patrick Pouyanne said after the signing of the South Pars deal that it would open the door for more business with Tehran.
South Pars is part of the world’s largest gas field which is shared with neighbouring Qatar where development of the deposit known as the North Field has made the tiny Gulf state the world’s biggest producer of liquefied natural gas.
Total is active in both Iran and Qatar as well as the UAE, which together with its bigger neighbour Saudi Arabia is in dispute with Qatar over its close ties with Iran.
Total’s CEO told Reuters last month the petrochemical plants project in Iran was less advanced than South Pars 11 because Total would need to fund that project with loans from banks while South Pars could be developed with its own funds.
Iranian deputy oil minister, Amir Hossein Zamaninia said on Monday that Iran and Total have held “positive talks” to cooperate in petrochemicals but added that the deal was not final.
An oil industry official said in January that Iran plans to build 25 petrochemical plants and is currently seeking $32 billion in foreign investment to fund projects.
Reporting by Bozorgmehr Sharafedin; Additional reporting by Bate Felix in Paris; Editing by Louise Heavens, Greg Mahlich