The Linde Group is among a number of European companies reported to be interested in reviving their presence in Iran’s petrochemicals sector amidst the expected lifting of UN sanctions against the country.

Iran has been the subject of varying degrees of international sanctions since its nuclear programme became public in 2002, perhaps most notably the UN Resolution 1696 of 2006 that was imposed after Iran refused to suspend its uranium enrichment programme.

A resolution was announced last week, however, for the end of many of these sanctions in exchange for limits to Iran’s nuclear capabilities. It comes after almost two years of negotiations and sees Iran pledge to allow international monitors to inspect its facilities for the next 10 years, in addition to a number of other measures.

The resolution has this week been approved by both the UN Security Council and the European Union (EU), with the latter putting in motion the lifting of its own sanctions – including prohibitions on the purchase of Iranian oil.

There are now expected to be a raft of European companies keen to pursue trade opportunities in the Middle Eastern country, with reports that both BASF and Linde are among those to have discussed a return to Iran’s petrochemicals sector.

Neither company is understood to have confirmed any such intentions.

But Iran’s National Petrochemical Company (NPC) states that its Managing Director, Abbas Shari-Moqaddam, was scheduled to meet with representatives of both Linde Group and BASF on Monday to ‘explore avenues for enhancing cooperation in the petrochemical sector’.

“Shari-Moqaddam underlined the former presence of the two companies in Iran before the western sanctions were imposed on Tehran,” a statement promoted on the company’s website continued.

gasworld Business Intelligence understands that none of the major international industrial gas companies are currently active in Iran. Linde formerly had a sizeable presence in the country, but exited the country in 2010 under political pressure to leave Iran from countries in the West.

Iran, Saudi, Middle East

Potential yet to be realised

The effects of international sanctions on Iran have been well documented, while it is widely reported that the country’s petrochemicals sector would benefit from at least $70bn of investment to complete ongoing projects.

gasworld Business Intelligence believes there is a lot of potential yet to be realised for the Iranian industrial gas sector, if the country’s differences with the international community can be resolved.

Boosted by strong revenues from the petrochemical and steel industries, the industrial gas sector in Iran has significantly outperformed the overall economy in the last decade and has seen revenue growth begin to pick up over the last year following a period of previous stagnation at the hands of international sanctions. As a result, the commercial industrial gas market in Iran is estimated to have generated revenues of $280m in 2014, up from $92m in 2004.

This upward trend could continue in the face of any renewed flow of investment into the country’s petrochemicals industry; the manufacturing sector accounted for the largest proportion of industrial gas revenues (35%) in 2014, while chemical and refining clients combined accounted for just 16% of total sales.

gasworld therefore expects a growing share of sales to be made within the metallurgical and petrochemical industries in the future – largely at the expense of a decline in importance of revenues generated within the manufacturing sector – and a continued rise in industrial gas intensity.

No further developments in terms of Iranian sanctions are expected for the next 90 days as US Congress considers its approval of the resolution.