Despite the signing, industry sources say that any delays over financing or wrapping up the early work agreement could lead to renewed price negotiations as materials costs continue to rise. The contract price is understood to be based on 2004 procurement prices.

The change in government, which is expected to lead to significant personnel changes at senior levels of the Oil Ministry and its subsidiaries, could dissuade possible financiers from committing to the project until the new administration has shown its intentions.

The project will involve the development of two identical ethane crackers each with capacity of 1.2 million tonnes a year (t/y). The plants will be fed by 2.2 million t/y of natural gas sourced from South Pars phases 4-5 and 9-10 and will in turn supply the polyethylene plants now planned along the route of the western pipeline. The project will be owned by Bakhtar Petrochemical Company, a joint venture between NPC and the private sector.

Linde and Sazeh also bid together for the olefins 8 project at the Arvand Petrochemical Companycomplex in Bandar Imam, for which the local Petrochemical Industries Design & Engineering Company is in contract negotiation.

With contractor selection almost complete on the olefins 8 and 11 cracker projects, NPC is mulling its next two major cracker projects – olefins 12 and 14. The liquid olefins 12 cracker will, at 1.9 million t/y, be the world’s largest standalone unit. The olefins 14 cracker will have capacity of 1 million-1.2 million t/y. Both are to be situated in Assaluyeh.