The contract was signed last June after the submission of bids in late 2004. But the perceived high political risk in Iran combined with the high exposure of banks in the market has made it difficult to attract financing for the project. If funding cannot be brought in, there is a danger that the project's export credit approval from Germany's Hermes will expire. The contract price could also change because material costs have risen significantly since bids were submitted. However, industry sources say they are uncertain if local contractors now have the capacity to carry out such a large project without compromising its proposed schedule.

The project will involve the development of two identical ethane crackers, with capacity of 1.2 million tonnes a year (t/y) each. 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 of National Petrochemical Company (NPC) and theprivate sector.

NPC has invited contractors to submit bids in mid-June for the olefins 12 complex, which will contain the world's largest standalone olefins cracker. But industry sources say contractors are unenthusiastic about bidding in the current climate and NPC is likely to put the deadline back substantially (MEED 16:12:05).