Tabriz Oil Refining Company signed a €1.6 billion ($1.88 billion) deal with SK E&C Company of South Korea and Oil Design and Construction Company of Iran on financing and implementing a project to upgrade Tabriz Refinery in East Azerbaijan Province.
SK E&C Company of South Korea and Oil Design and Construction Company of Iran aim to cut the refinery’s mazut production to less than 2% from the current 20% in four years, Financial Tribune reported.
The optimization will help Tabriz Refinery produce fuels with higher value-added, such as Euro-5 quality gasoline and diesel.
The signing ceremony in uptown Tehran was overseen by government officials of both countries.
SK E&C Company Ltd. provides civil, transportation, telecommunications infrastructure and building construction services to customers in the Middle East, Southeast Asia and Latin America. It offers services in the areas of planning, feasibility studies, sale, design, engineering, construction, operation, maintenance and installation for chemical and power plant projects.
The South Korean-Iranian consortium will be in charge of design, engineering, procurement and installation of equipment, with the Export-Import Bank of Korea or Korea Eximbank to finance the venture.
On the sidelines of the signing ceremony, Abbas Kazemi, Iranian deputy oil minister, referred to bilateral cooperation with South Korean companies, such as Daelim Corporation and Hyundai, hoping that the SK E&C will expand its operations in Iran.
Asian companies have actively sought downstream projects in Iran's emerging petroleum industry after the easing of international sanctions in January of last year. As per the terms of the contract, at least 51% of equipment and services for refurbishing Tabriz refinery should be provided by Iranian companies.
Tabriz refinery project is part of efforts to raise the output of high-quality gasoline and meet the increasing demand for the fuel at home.
"Gasoline production in the Persian Gulf Star Refinery in the city of Bandar Abbas [Hormozgan Province] stands at 7 million liters per day," Kazemi said, adding that the output level reaches 11 ml/d in the next few months as more units of the Middle East's largest gas condensate refinery go on stream.