ITOCHU INVESTS IN IRANIAN PETROCHEMICAL PROJECT NEAR BUSHEHR

The Nihon Keizai Shinbun and some Thai newspapers are reporting that the Itochu Group and two large Thai business groups have agreed to a partnership with Iran’s state-owned National Petrochemical Co. in a polyethylene plant near Bushehr, Iran. The plant is scheduled to open in 2008.

One of the attractions of the deal was, according to the Bangkok Post, that “Iran is a very interesting place for a petrochemical investment because of its low cost of feedstock. The price of petrochemical products produced there is very competitive.” The Nihon Keizai Shinbun and Dow Jones Newswire added that one of Itochu’s motives in pursuing the deal was to preempt Chinese moves in the region and to play a role in supplying the quickly-expanding Chinese market.

The Nikkei suggested that there are two elements of risk in the deal. The first is to invite the hostility of the US government, which is trying to pressure Iran over the issue of nuclear development. The second is that political instability in Iran itself could lead to a repeat of the Mitsui and Co. nightmare over the IJPC project in the 1980s.

Sources:

Nihon Keizai Shinbun, “Iran de Sekka Kigyo—Itochu, Tai Kigyo to Kumu (Itochu and a Thai Company Form a Tie-up in Regard to Iranian Petrochemicals),” Nihon Keizai Shinbun, June 2, 2005.

Nihon Keizai Shinbun, “Itochu ga Iran Sekka—Chuto Kyokyu Yoryoku Chakumoku—Seijiteki ni Risuku mo (Itochu Pays Attention to Retaining Reserves of Iranian Petrochemicals: There is a Political Risk as Well),” Nihon Keizai Shinbun, June 2, 2005.

Petsiri, Ekarin, “SCC, NPC to invest in $250 m HDPE plant in Iran,” Business Day, May 15, 2005.

Sato, Shigeru, “Itochu: Plan to Set Up Petrochemical Operations in Iran Via JV,” Dow Jones Newswire, June 1, 2005.

Treerapongpichit, Busrin “SCC set to invest in Iranian venture: Security and political risk remain concerns,” Bangkok Post, May 14, 2005.