Iran May Hold Tender to Complete Major Refinery

"Different options are on the table for financing and developing the second and third phases of the Persian Gulf Start Refinery, including a tender that may include foreign companies," said Eslam Khosravi, a member of the board of Tamin Petroleum and Petrochemical Investment Company whose firm is a stakeholder in PGSR.

The first Phase of PGSR was launched in April by President Hassan Rouhani, more than a decade after construction began in the city of Bandar Abbas, Hormozgan Province. Once completed, it will become one of the largest condensate refineries in the region with a daily processing capacity of 360,000 barrels.

The refinery is designed to produce 36 million liters per day of gasoline, or 12 ml/d in each phase, according to Financial Tribune.

Officials had hoped the refinery's two remaining development phases to be completed by the end of the current fiscal year in March 2018.

"TAPPICO, holding a 49% share in the project, is doing everything within its power to finance the next PGSR development phases," Khosravi said.

The company has so far guaranteed a loan of 1 trillion rials (about $25 million) from a domestic bank as part of the PGSR funding estimated at €700 million-1 billion.

TAPPICO, affiliated with Iran's Social Security Organization, owns 32 subsidiary companies operating in oil, gas, petrochemical, refining and rubber industries. Its main area of business is financing large-scale projects across the chain of petroleum industry.

In the previous fiscal year that ended in March, Iranians used almost 74 million liters of gasoline daily, with imports averaging 12 million liters a day. PGSR gasoline supplies will plug the gap between demand and domestic output, and even enable Iran to become an exporter of the commodity.

--- Direct Negotiations

TAPPICO's Khosravi also left the door open for an arrangement similar to that of French oil and gas company Total with Tehran to develop a major offshore gas venture.

"Another alternative is [directly] negotiating with foreign investors" outside of a tendering process, he said.

Total sealed a $5 billion deal in July to develop Phase 11 of the giant South Pars Gas Field that is shared between Iran and Qatar in the Persian Gulf. It marked the first deal signed within the framework of Iran Petroleum Contract, a new style of contracts aimed at propping up foreign investment in the key petroleum sector, albeit outside of tender.

TAPPICO is also a financer of another major refining project, known as Siraf Refining Park, that is planned to be built in a city of the same name in the southern Bushehr Province. The company signed an agreement worth $3 billion in July with South Korea’s Hyundai and Daelim Corporation as well as Japan’s Chiyoda Corporation to develop the venture.

New refining projects, including Siraf with a processing capacity of 480,000 barrels a day, are set to raise Iran's crude oil refining capacity to 3.2 million bpd in four years.