Jackpot in Iran
As the global construction industry is facing the most difficult times ever, domestic construction companies have won 6 trillion won (US$5.3 billion) of deals in Iran in where economic sanctions were lifted. Daelim Industrial Co. obtained a 2.3 trillion won (US$2 billion) deal to improve oil refinery facilities at the end of December last year and signed its formal contract on March 12 (local time). Hyundai Engineering Co. also clinched a 3.8 trillion won (US$3.31 billion) project to build a petrochemical producing facility, and signed its formal agreement in Iran on the same day. In particular, the project is the largest-ever deal for a domestic constructor to clinch with a firm in the Middle Eastern country,
Hyundai Engineering announced on March 13 that it signed the formal agreement worth 3.8 trillion won (US$3.31 billion) with AHDAF, a subsidiary of the National Iranian Oil Company (NIOC), in Tehran on the 12th for the second phase of Phase 12 of South Pars gas field project, along with Hyundai Engineering & Construction (Hyundai E&C).
Under the deal worth 3.1 billion euro (US$3.3 billion), Hyundai Engineering (3.2 trillion won or US$2.79 billion) will form a consortium with Hyundai E&C (600 billion won or US$522.88 million) to build a facility to produce 1 million tons of ethylene, 500,000 tons of monoethylene glycol, 350,000 tons of high-density polyethylene and 350,000 tons of low-density polyethylene per year in the world’s largest gas field South Pars in Tonbak, about 1,100 kilometer (683 miles) south of Iran’s capital Tehran. The construction is expected to take 48 months after breaking ground.
Hyundai Engineering had made thorough preparations for two years after AHDAF, which acknowledged the company’s competitiveness in petrochemical plants, suggested to take part in the project first in 2015 before economic sanctions on Iran were lifted. The company received a letter of award (LOA) from AHDAF in December last year in seven months after signing the basic agreement in May, and succeeded in signing the formal contract three months later. Hyundai Engineering said that the 85 percent of fund for the engineering, procurement, construction and financing (EPCF) contract in which support construction costs first and get money back with interest later would be supported by Korean lenders such as the Export-Import Bank of Korea and Korea Trade Insurance Corp.
Daelim Industrial received a LOA from Iran’s Esfahan Oil Refining Co. (EORC) to improve oil refinery facilities at the end of December last year, and signed the formal contract on the 12th (local time) in Iran.
Daelim Industrial solely obtained the 2.23 trillion won (US$1.95 billion) deal. The project is to add facilities in the oil refinery in Isfahan, located 400 kilometers south of Tehran, the capital of Iran. Iran has a rich abundance of natural resources, the world's first largest natural gas reserves and fourth largest oil reserves. As economic sanctions on Iran are removed and oil prices are rebounding, Iran is expected to place a series of orders for chemical plants, such as refineries and gas and petrochemical plants.
In addition to the latest projects, Daelim Industrial is about to win a US$2 billion (2.29 trillion won) deal to construct Bakhtiari Dam hydroelectric power plant, while Hyundai Engineering signed a basic agreement worth US$500 million (573.75 billion won) with Thermal Power Plant Holding Company (TPPH), a subsidiary of the Ministry of Energy of Iran, to build a combined cycle power plant in Zanjan, and is about to wrap up the deal. Daewoo Engineering & Construction Co., GS Engineering & Construction Corp. and Samsung C&T Corp. are also seeking to clinch projects to establish hospitals, roads and railways, petrochemical plants and power generation facilities.