World Business and Economic Analysis
World Business and Economic Analysis
Turkish energy company Unit International has reached a deal worth $4.2 billion with Iran’s Energy Ministry to build seven natural gas power plants, in what it said was the biggest investment in Iran since the lifting of sanctions.
A total of seven power stations, to be built in seven separate regions of Iran, would have a combined installed capacity of 6,020 megawatts, said the company in a statement, as reported by Reuters.
“Unit International has reached a deal with the Iranian Energy Ministry worth some $4.2 billion to build natural gas combined cycle power plants,” Unit said, adding that the agreement was signed at a ceremony in Tehran on June 1.
Unit International is owned by Ünal Aysal, the former chairman of major Turkish soccer club Galatasaray.
Aysal said to reporters that when completed, the power plants would meet 10 percent of Iran’s energy needs. Construction of the seven plants was planned to begin in the first quarter of 2017.
The company signed a 20-year agreement with Iranian officials to build the power plants on a build-operate-transfer (BOT) model.
“Over this period, Iran will provide natural gas to us. Iran will also purchase the power that will be generated by us on a pre-defined price for a six-year period. After this, the electricity will be exported by Iran or sold in the country’s free market,” Aysal said, adding that such investments had only been made by Iranian companies up to now.
“This agreement represents a first in terms of the opening of Iran to foreign direct investment,” he added.
1,000 hours of negotiations
Mohsen Tarztalab, the head of Thermal Power Plant Holding, which is responsible for the deal on behalf of the Iranian Energy Ministry, said the sides negotiated for the deal over more than 1,000 hours in the last 12 months.
“As the gas-fired power plants have outmoded technologies, their efficiency levels are low. The power plants that will be built by Aysal’s company will be two times more efficient than the existing ones,” he said.
Iran’s deputy energy minister, Husheng Felahetiyan, told daily Hürriyet last week that the country would soon sign a deal worth around $3 billion with Turkish companies to build power plants with an installed power of 5,000 MW.
Felahetiyan also noted that the power trade between Iran and Turkey would increase, adding that Iran now sells around 350 MW of electricity to Turkey.
The United States, the European Union and the United Nations lifted most sanctions on Iran in January under a deal with world powers whereby Tehran agreed to curbs on its nuclear program.
Turkish companies have seen Iran as best Investment hub andmove as a major trade and investment opportunity, with the car, clothing, textiles, machinery and chemicals sectors seen as offering particular potential.
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An NIOC official announced that the existing oil export contract with Turkey’s largest refinery has been extended.
Executive Director for International Affairs at National Iranian Oil Company (NIOC) Seyyed Mohsen Ghamsari discussed the latest status of crude oil sales to Turkey in the post-sanction era saying “oil export deal with Tüpraş, Turkey’s largest refiner, has become extended.”
The official said the volume of oil exports to Turkey remains equal to that of the year 2015 asserting “negotiations have kicked off with the neighboring country over increasing the sales figure.”
Ghamsari emphasized that oil sales to Turkey might experience fluctuations for certain periods of time though the average amount remains constant in the long run; “in other words, each company might vary its consumption or production under different circumstances.”
“The average amount of crude exports to Turkey remains at about 100 thousand barrels per day,” underlined the official stressing “Turkish Petroleum Refineries Corporation, known as TÜPRAŞ, is capable of purchasing oil from various countries.”
NIOC executive director for international affairs recalled that the possibility exists for Turkey to buy crude oil from Iraq, Libya, Saudi Arabia as well as other countries; “nevertheless, the amount of cooperation between Iran and Turkey over oil sales remains at a satisfactory level.”
In 2015, Turkey imported a total of more than one million barrels of crude oil and other oil products per day.
The amount of Iraq’s crude sales to Turkey became twofold in 2015 to reach a total of 230 thousand barrels per day offering Iraq 43 per cent of Turkey’s oil market.
Iran managed to export a daily amount of 110 thousand oil barrels to Turkey in the previous year gaining a share of 22 per cent in the neighboring country’s market.
Countries like Saudi Arabia and Kazakhstan mark other large exporters of crude oil to Turkey.
Iran and Iraq have always had rivalry over development of joint fields and the removal of sanctions has triggered a fresh round of competitiveness between the two OPEC-member countries.
Oil Minister of Iran Bijan Namdar Zanganeh has reported on final talks with Turkey’s refineries over trebling the amount of oil exports in which case Iran’s crude sales to Turkey will increase from the current 100 thousand barrels to a total of 300 thousand barrels per day.
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Germany’s Giant company Abels Decker Kuhfuß Lenzen (ADKL) signed a €2 billion contract with Iran’s Masjed Soleyman Petrochemical Industries Company (MIS) on the implementation of a petrochemical project in Iran.
According to the Shana news agency, this contract, which could be expanded up to €10 billion, was signed by Yousef Davoodi, the managing director of MIS, and Bernd Lenzen from ADKL, in Tehran on May 25.
Based on the contract, ADKL will cooperate with MIS in providing the funds, transferring the technology and implementing contracts for the project within the framework of engineering, procurement, construction and finance (EPCF).
This contract was signed during the visit of Garrelt Duin, the state minister for economic affairs and energy of Germany’s North Rhine-Westphalia State to Iran.
The production control director of Iran’s National Petrochemical Company (NPC) Alimohammad Bossaqzadeh said in April that domestic petrochemical industry requires attracting $77 billion of finance by 2020.
Meanwhile, NPC managing director Marzieh Shahdaie said in January that the Islamic Republic has developed up 30 new petrochemical projects to be implemented in the post-sanctions time.
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