NEW DELHI – Indian Oil Corporation is expecting to build a $3 billion petrochemicals plant in Iran, according to sources close to the matter.
Iran has assured Indian Oil of cheap natural gas as feedstock.
Indian Prime Minister Narendra Modi’s government is eyeing energy and infrastructure investments totalling billions of dollars in Iran, including upstream gas production and port developments. India has sought to secure ties with Iran and ensure access to its abundant hydrocarbons as years of sanctions on the Arabian Gulf nation may be nearing an end.
Economic and financial restrictions on Iran, once the second-biggest producer in the Organisation of Petroleum Exporting Countries, left it in need of outside money and expertise to rejuvenate its flagging hydrocarbon industry. Indian companies will be competing against state-run energy giants of regional rival China, as well as oil majors including Royal Dutch Shell Plc and Total SA, if Iran’s breakthrough nuclear deal this year holds and sanctions are lifted.
Indian Oil, the biggest oil refiner in India, is betting on petrochemicals to drive growth. The company plans to spend $4.5 billion in the next few years to expand the business, according to its website.
The shares of the company rose as much as 0.7 % to 408.15 rupees and traded at 407.15 rupees as of 9:19am in Mumbai. The benchmark S & P BSE Sensex fell 0.4 %.
A natural gas-fed petrochemicals plant will allow Indian Oil to diversify from its existing projects that use oil products from its own refineries, the people said.
Petrochemicals accounted for 4.4 % of the company’s revenues in the year ended March 31, while accounting for almost 39 % of its operating income.
Indian Oil sees “tremendous potential” in the industry, Chairman B. Ashok said in an interview published in its latest in-house newsletter.
Iran and India are planning mutual energy investments, Iranian Foreign Minister Mohammad Javad Zarif said earlier this month in New Delhi. The Iranians won’t forget India’s support during the hard times, he said.
US President Barack Obama on Sunday won the support of another Senate Democrat for his Iran nuclear deal, putting the agreement three votes short of becoming veto-proof.