Aimed at financing and implementing the upgrading project in Tabriz Oil Refinery, the HOA was signed in Tehran on Saturday between Tabriz Refinery Company and a consortium consisting of Iran’s Oil Design and Construction Company (ODCC) and South Korea’s SK E&C (Engineering and Construction) Company.
The deal was sealed at presence of high-ranking Iranian and South Korean officials and seeks to convert fuel oil to higher value products in line with Euro 5 standard.
The Iranian-Korean consortium will undertake implementation of the project by designing, engineering, purchasing goods and equipment, construction and installation. Moreover, South Korean banks including Korea Eximbank (Export–Import Bank of Korea) will finance the project which will be executed on an Engineering, Procurement, Construction and Financing (EPCF) basis.
Through the 48-month contract, fuel oil production rate at the Iranian refinery will decrease from the current 20 to lower than two per cent leading to improvement of quality of Tabriz Oil Refinery products including gasoline and diesel as well as operation of desalting plants and other refinery facilities.
Last year, Iran signed a deal with SK group to conduct feasibility study for the development of Tabriz Oil Refinery in order to increase the production capacity for gasoline and diesel fuel. It also envisages promotion of desulfurization facilities.
South Korean National Assembly speaker Chung Sye-kyun, who attended President Hassan Rouhani’s swearing-in ceremony, oversaw the signing between SKEC, Tabriz Oil Refining Company and National Iranian Oil Engineering and Construction Company (NIOEC).
The Tabriz oil processing plant, built in 1976, is among the Iranian refineries in dire need of upgrade and modernization. In February, the country signed a $3 billion contract with China to upgrade the Abadan refinery in southwest Iran.
Tabriz operates with a capacity of 110,000 barrels per day, turning crude oil to liquefied petroleum gas (LPG), gasoline and diesel fuel.
According to Managing Director of National Iranian Oil Refining and Distribution Company Abbas Kazemi, Iran needs $14 billion of investment in total to fix and upgrade Tehran, Bandar Abbas, Isfahan, Tabriz and Abadan refineries.
Iranian refineries, he said in February, were operating at a capacity of 500,000 barrels per day, which would rise to 600,000 bpd in the current Iranian calendar year (began March 21).
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