South Korean firm Hyundai Engineering has signed a deal worth $3.2bn with Iran’s Ahdaf Investment Company to develop phase two of the Kangan Petro-Refinery Project.

The deal is the biggest in the petrochemicals sector since nuclear-related sanctions on Tehran were lifted in January 2016.

Phase two of the project will focus on developing a petrochemicals complex in Tonbak, in the southern Bushehr Province.

The complex is set to have an annual production of a million tonnes of ethylene, 500,000 tonnes of monoethylene glycol and 350,000 tonnes of heavy and light polyethylene.

Construction will take 48 months and financing will be carried out over a nine-month period by Korean banks as per the engineering, procurement, construction and finance contract.

Phase one of the Kangan Petro-Refinery Project at Iran’s South Pars gas field has made 30 per cent progress with $127m investment, according to Shana, the news agency affiliated with Iran’s petroleum ministry.

South Korean firms have been making big gains in the Iranian petrochemicals sector. In December, Daelim signed a $1.9bn deal to expand facilities at the 375,000 barrels-a-day Isfahan Oil Refinery.

Iran’s National Iranian Oil Refining & Distribution Company has been courting investors back into the petrochemicals sector and is seeking an estimated $14bn investment in the refining sector and a further $32bn across various other operations as it looks to upgrade ageing refineries and invest in new projects.

Three petrochemical projects worth $5bn are set to be launched by April, as Iran seeks to ramp up its production capacity to 180 million tonnes a year by 2025.