A South Korean engineering firm has signed a $750m contract with National Iranian Oil Company (NIOC) covering the development of phases 17 and 18 of Iran’s South Pars gas field, according to Iran’s state-run Mehr news agency.
It remains unclear which firm has secured the deal, as major South Korean engineering companies working in the region have denied involvement in the project.
Daelim Industrial is currently the only South Korean engineering and construction firm working in the Islamic Republic, with two major schemes. The first, a $111m deal for liquefied natural gas (LNG) storage tanks projects at Tombak, on the Hormuzgan coast in the southwest, was awarded in 2007 and is expected to be completed by mid-2011. The second contract, awarded in 2009, covers onshore gas treatment facilities at Phase 12 of the South Pars field, which is due for completion in 2013.
With both projects already under execution, the company has pressed ahead with construction, despite tougher US and UN sanctions imposed since July this year. The company says it has not pursued any further projects.
“Daelim has not won any contracts in Iran recently,” says a spokesman for the company in Seoul.
GS Engineering & Construction (GS), another South Korean firm, said in June that it had pulled out of its $1.2bn contract to build gas-sweetening facilities for South Pars Phases 6, 7 and 8 for Iran’s Pars Oil & Gas, a subsidiary of NIOC. Signed in October 2009, the company had yet to start work on the scheme when it pulled out.
Due for completion by the middle of 2013, GS had not received any performance bonds from Pars Oil & Gas when the deal was cancelled. Pars Oil & Gas, however, says that GS had not fulfilled its obligations, forcing it to cancel the deal.
In May 2010, Daelim was included in a list of firms with commercial activity in the Iranian energy sector and US government contracts presented to the US Senate. Daelim signed a $111m contract with the US Army Corps of Engineers construct family housing at a US base in South Korea in August 2009.
Korean banks have stopped issuing new finance for Iranian projects since 2004, and the country followed the US in imposing fresh sanctions on firms working with the Iranian energy sector in September, blacklisting more than 100 companies, including the Seoul branch of Iran’s Bank Mellat. It has not been an easy choice. As South Korea’s fourth-largest supplier of crude oil, Iran accounts for about 10 per cent of the country’s supplies.