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Korea-Japan Consortium Signs Basic Contract on Oil Refinery Project in Iran

Aconsortium including Daelim Industrial and Hyundai E&C, has signed a basic contract to push forward with an oil refinery project in Siraf, Iran.

Oil Refinery Project
An international consortium including Korean builders has signed a basic contract to push forward with an oil refinery project in Siraf, Iran.

According to state-run IRNA News Agency of Iran on July 17, the Korea-Japan consortium consisting of Daelim Industrial, Hyundai E&C, and Chiyoda of Japan, signed an HOA on the construction of a US$ 3 oil refinery project in the Siraf area, Bushehr Province of Iran.

An HOA refers to a basic contract for the main conditions for project implementation which has a pre-contractual nature. An HOA is likely to lead to the main contract but does not mean that the order has been confirmed.

The project will be conducted by the Export Credit Agency (ECA) method. The cost of the project will be paid by the ECAs in Korea and Japan and the ECAs will recoup it in the future. The Export-Import Bank of Korea and Korea Trade Insurance Corporation will shell out about US$2 billion, while Japan’s NEXI US$1 billion.

The Shiraf project is the largest in the world and will be able to produce 480,000 barrels of petroleum products per day at eight refineries. When completed, Iran’s refining capacity and petroleum product output will swell 22% and 57%, respectively.

“The order for the Shiraf project has not been fully confirmed yet. We have to accept an LOA but have not received it yet,” said an official of Hyundai E&C.

The Original Posted by Michael Herh/Business Korea

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