When The Linde Group and local player Delvar Afzar Industrial Gases announced their collaboration in a new joint venture (JV) in mid-January, it signalled the dawn of a new era in Iran’s industrial gases industry.
Linde Delvar Afzar Industrial Gases (LDAIG) will help to facilitate a new phase in Iran’s merchant gases business, following the lifting of various international sanctions against the country one year prior.
And with the Iranian merchant gas market expected to double by 2025, the time is now for Iran to take its place on the global stage.
That’s according to Iraj Ghorbani, CEO of Delvar Afzar Industrial Group (DA). Ghorbani previously described the new JV as a ‘game-changer’ in Iran and speaking exclusively to gasworld, he explained the business case behind that confidence.
“It’s the first time in Iran that we introduce this competitive package,” he said. “In industrial gas, we have always had production, distribution and application. Clearly DA has a good hand on production and distribution for liquid product (liquid nitrogen, liquid argon and liquid oxygen). On the other side, The Linde Group has a strong footprint in production and application. Applications are structured on technology and end-user needs; increasing efficiency and reducing OPEX [operating expense].
“So let’s combine these strong players and create the cocktail called LDAIG. Our facilities, with high quality product. Our distribution network, which has built up during the last decades, and technology will be injected [with impetus] by Linde AG. Also, the high-demand specialty and rare gases will be added to LDAIG’s shelves.”
“Liquid and gas product, and application development, will definitely include the whole industrial gas package,” he added, “having two strong hands in DA and Linde.”
gasworld Business Intelligence valued the industrial gas market in Iran at around $270m in 2015 and identified over 100 captive production facilities. It cites the merchant market as being one of the key areas of opportunity in any expansion of the industry in the country, with LDAIG seemingly now at the forefront of this window of opportunity.
“At the moment there is no footprint of big industrial gas companies who are directly doing merchant businesses in Iran…”
In pooling strengths and leveraging the assets of both parties, LDAIG aims to become a leading supplier of industrial merchant gases and healthcare gases in Iran, and Ghorbani affirmed, “Every new business has challenges in the market, however our strength is turn challenges into opportunities. Several traders bring competitor’s product to Iran. At the moment there is no footprint of big industrial gas companies who are directly doing merchant businesses in Iran.”
“Different industries will be benefit from this business. Our goal is to reduce the long lead-time of products for these industries. LDAIG’s mission is to contribute a big share in the Iran market by providing high quality products.”
But safety is also paramount. “[The] Long-term strategy should be a culture of advanced technology, know-how and safety improvement,” he encouraged. “Safety is one of the key factors across the world for industrial gases. Therefore, we are planning to implement the culture to the everyday jobs of our employees, clients and customers.”
When the news broke in summer 2015 that international sanctions against Iran were set to be lifted, it sparked a wave of interest in the country’s potential that only intensified in the months that followed.
Speculation was rife about the flood of investment that may lie ahead, particularly from Western Europe, and the bountiful possibilities that lay in wait across multiple markets. Such suppositions intensified in January 2016, with confirmation from the International Atomic Energy Agency (IAEA) of Iran’s compliance with a deal to monitor its current and future nuclear capabilities. The agency affirmed the expected lifting of sanctions and described the development as ‘an important day for the international community’.
The news had been expected to officially start a deluge of investment in the country, triggering the sale of Iran’s oil internationally and unlocking an estimated more than $100bn in frozen assets. From an industrial gas point of view, it would be 12 months until any major breakthrough seemed to be realised however, with the announcement of LDAIG. So are the floodgates now open on the rebirth of this market-in-waiting, and is this Iran’s time?
Ghorbani believes so, “Absolutely yes. We are in the stage of development to learn and perform. We are doing the market intelligence for the Middle East and clearly set our goals based on market needs.”
“LDAIG will help to develop and create a new era for the gases industry by implementing know-how for different applications.”
Ghorbani said his excitement for the new JV is ‘clearly messaged here’ and spoke with conviction for DA’s wider potential. “We are enthusiastic to be the first merchant company who knows the technology and can provide the gases to our customers based on their need,” he enthused.
“We believe in our expertise; our team is engineering sale experts and business developers who have been in the Iranian and international industrial gas market. Our mission is to extend the business overseas,” he enthused.
“We structured our portfolio and business plan to increase our production up 200% till 2025.”