This is a sector with great potential since there are interesting projects in the pipeline and it offers great margins across its value chain.

Gholam Reza SOLEYMANI Managing Director GHADIR INVESTMENT COMPANY

Attractive margins

September 12, 2017

Gholam Reza Soleymani, managing director of Ghadir Investment Company, talks to TOGY about developments in Iran’s petrochemicals sector, the attractions of the Iranian market and the company’s ongoing growth. Ghadir Investment Company participates in various industries via its seven holdings and 140 subsidiaries, which operate in areas including oil, gas, petrochemicals, cement, construction, mining and many others.

Ghadir Investment Company is listed on the Tehran Stock Exchange, where as of mid-2017 it ranked as the eighth-largest company by market capitalisation. In August 2017, Ghadir, Russia’s Zarubezhneft and Turkey’s Unit International announced a deal worth USD 7 billion to collaborate on drilling in Iran. A statement from Unit said the three companies would jointly invest USD 7 billion in drilling at three oilfields and one gasfield.

• On transporting Turkmen gas: “We are supporting Turkmenistan by transporting their gas to neighbouring markets with rising demand through Iranian pipelines. Even though this business does not leave us a big margin – as Turkmenistan takes most of the profit and the Iranian government also receives a swapping cost – in Ghadir Investment we see this as a strategic move as we continue to create good commercial relationships and networks in the region.”

• On Iran’s labour pool: “The country has a qualified and cost-effective labour force. There are many young and qualified experts available in the country, which saves the incoming company valuable time, since there is no need to wait for expats to start operations.”

Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Gholam Reza Soleymani below.

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What is your outlook on Iran’s petrochemical sector for the next decade?
This is a sector with great potential since there are interesting projects in the pipeline and it offers great margins across its value chain as it is integrated with upstream development.
Considering the current post-sanctions situation following the implementation of the JCPOA, we are optimistic that Iran will be able to use more international financial resources, as well as further technical licensing to keep developing this industry. In this sense, we are optimistic about the petrochemical export targets of USD 20 billion per year set by NPC [National Petrochemical Company] for the foreseeable future.

How would you define the Iranian market’s competitive advantages for international investment?
First of all, Iran has vast and rich resources and reasonable costs. Considering the existing reservoirs of oil and gas, and also their very competitive development costs, this market momentum results in a fantastic opportunity for international companies to invest in this field.
This can be done in different shapes, such as JVs, partnerships or even direct financing. From our extensive market knowledge, I can assure you that the profits and margins will be three to four times those seen in Europe.
Secondly, Iran’s human capital resources are another advantage. The country has a qualified and cost-effective labour force. There are many young and qualified experts available in the country, which saves the incoming company valuable time, since there is no need to wait for expats to start operations. All of this makes the market uniquely attractive.

What have been the highlights of the past year of Ghadir Investment Company’s operations?
We have had interesting developments over the past year in oil, gas and petrochemical projects. For instance, we have successfully concluded the third phase of the Pardis petrochemical facility, adding 1 million tonnes of ammonia and urea production to the complex’s output, and making Pardis the largest producer of these in the region. In this area, the Shiraz petrochemical complex, also under our scope, has likewise enhanced its production of urea and ammonia by 1 million tonnes.
In regards to the Kian petrochemical facility project for the production of olefins, there has been some movement as well. We have secured the land and the feed licence already, and the financing is being finalised. Currently we are in the stage of selecting the machinery and equipment for its order request.
We have also been focusing on a project to convert flare gas to urea and ammonia, which has a very important environmentally friendly angle. We are going to put up the plant and collect all the flare gases in a single area. As there are several petrochemical plants and refineries in Asaluyeh, this localisation will help reduce polluting emissions.
Finally, in the oil sector, we are among the 11 Iranian companies qualified and certified to perform exploration and production activities under the IPC [Iran Petroleum Contract]. We have started to negotiate with big names worldwide to form joint ventures and be an active player in the market.

What is the company’s scope of interest in the Mokran Petrochemical Complex?
As the two main petrochemical hubs in the country – Mahshahr and Asaluyeh – are almost saturated, with no land left for new plants, the Ministry of Petroleum introduced plans for a new major petrochemical development in the southern part of Iran, close to Chabahar: This is the Mokran Petrochemical Complex, where many plants and facilities are to be built in the foreseeable future.
Given the construction of this new hub, we are developing a project involving a 270-kilometre pipeline from Iranshahr to Chabahar to deliver the feedstock needed for these petrochemical plants located in Mokran. This project is projected to be complete in two years, and has the target to transport and supply 30 mcm [1.06 bcf] of gas per day to the area.

How is Ghadir Investment Company getting involved in the regional gas swap business?
Currently, we are purchasing the gas from Turkmenistan and supplying it to Azerbaijan and Turkey. Soon, Oman will be added to the list. Turkmenistan has very rich gas resources but scarce pipeline connectivity to the region. Their only direct option for exports is Russia, which is already the top global exporter of gas.
For this reason, we ventured into this business, where we are supporting Turkmenistan by transporting their gas to neighbouring markets with rising demand through Iranian pipelines. Even though this business does not leave us a big margin – as Turkmenistan takes most of the profit and the Iranian government also receives a swapping cost – in Ghadir Investment we see this as a strategic move as we continue to create good commercial relationships and networks in the region.

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