LONDON (ICIS)--OMV will conclude a seismic study project in Iran and then pull out of the country, the Austrian energy and petrochemicals major said on Thursday.
Foreign companies are under pressure to end their commercial relations with the Islamic Republic as the US is set to impose sanctions following President Donald Trump’s announcement on 8 May that he would unilaterally withdraw the US from the multilateral Iran nuclear deal.
Any such companies that choose to maintain business with Iran could be hit by secondary sanctions, although the EU, which remains supportive of the nuclear deal, has been attempting to develop plans to help shield European enterprises from the penalties.
“The financing constraints [related to Iran] of the US President have already had a direct impact on financial markets,” OMV said in a statement sent to ICIS news.
“Under our analysis, the risks of the announced sanctions are accorded [places a] greater weight than the compensation by the EU. [However] We at OMV intend to complete the seismic surveys in Iran.”
OMV declined to discuss which types of investment projects it might have eventually pursued in Iran.
However, a source at the company said: “Iran showed great promise, it was early days but there was potential across oil, gas and petrochemicals”.
In mid-May, French energy major Total said it would have to pull out of its investments in sanctions-targeted Iran unless it was granted a project waiver by the US with the support of the French and EU authorities.
Total had signed up to develop part of the large South Pars gas field in the Persian Gulf, and it was drawing up a $2bn petrochemical investment in Iran that would include the construction of an ethane cracker as well as three polyethylene (PE) lines.
In late May, Poland’s Ciech said it would address the question of whether to continue importing polyolefins from sanctions-hit Iran if and when another business opportunity presented itself.
Iran has estimated that it needs towards $200bn of investment to revive its rundown oil, gas and petrochemicals sector over the next five years, with towards $40bn needed for the petrochemicals industry alone.
The nuclear deal, otherwise known as the Joint Comprehensive Plan of Action (JCPOA), took effect in January 2016.
It removed crippling sanctions imposed on Iran in return for Tehran agreeing to measures that would bar its path towards a possible development of a nuclear weapon.
The Trump administration has said the JCPOA is disproportionately favourable to the Iranians, but its other signatories—Iran, the UK, France, Germany, Russia and China—are attempting to salvage the accord even though it no longer enjoys US participation.
Pictured: Aerial view of Iran's capital Tehran
Source: Morteza Nikoubazl/SIPA/REX/Shutterstock