Iran is poised to build new oil refineries and petrochemical plants, now that it has been freed from international sanctions. Experts warn that investing in the Middle Eastern country is still risky, in part due to sectarian tensions with neighbors such as Saudi Arabia. Yet companies are leery of another risk, too -- missing out on huge opportunities.
Yoshihiro Shigehisa
JGC, Japan's leading plant builder, is one company looking at ways to capitalize on this potentially lucrative market. The Nikkei spoke with Yoshihiro Shigehisa, JGC group's chairman emeritus, about the business outlook in Iran.
Q: What are your expectations for post-sanctions Iran?
A: This is an opportunity to tap a big, promising market. Iran has one of the largest populations in the Middle East, with nearly 80 million people. It has said it will raise its crude oil output in two stages, by 1 million barrels a day. We pulled our employees out of the country because of the sanctions, but we plan to station one or two in Tehran by spring. We expect growing demand for plants, and we hope to strike some deals by the end of this year.
There are opportunities for other Japanese businesses, not just ours. Due to the sanctions, the government has limited funds for new projects. For large endeavors, Tehran will seek to secure loans or work out other financial arrangements with its partners.
Q: Are you interested in other fields of business in Iran, besides the resource sector?
A: We want to invest in ways that will help the country to develop. Nothing has been decided yet, but we may consider investing in hospitals and agriculture, along with power plants.
Q: Earlier this year, Saudi Arabia cut diplomatic ties with Iran. Are you worried about the deepening religious conflict?
A: My sense is that the bilateral relationship will not deteriorate further. Falling crude oil prices are hitting both economies. They should be aware that this is not the time for them to confront each other.
But it is also true that we should be cautious when making deals with Iran, to avoid compromising our relationship with Saudi Arabia. I recently visited a Saudi customer I have known for years. Although this customer might not welcome us doing business with Iran, the impression I got was that they would accept it.
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