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Iran firms set for $2.4bn ship deals

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
Iran’s IRISL and IOOC have reportedly placed orders worth $2.4 billion with South Korean shipyards for the construction of ships – mainly those used to carry oil and petrochemicals.

Iran has placed orders worth around $2.4 billion with South Korean shipyards for the construction of ships to carry Iran’s oil and petrochemical products, The Wall Street Journal says. 

The orders, it added, have been placed by the Islamic Republic of Iran Shipping Lines (IRISL) and the oil producer Iranian Offshore Oil Company (IOOC).

The Korean companies involved in the case are Hyundai Mipo Dockyard, which is a subsidiary of shipbuilding giant Hyundai Heavy Industries Group, as well as Daewoo Shipbuilding and Marine Engineering Company.

China’s Dalian Shipbuilding Industry Company is also in talks with IRISL over new ship orders, the Journal has quoted people close to the case as saying.  

The agreements are part of Iran’s efforts to make a comeback in global shipping after the lifting of international sanctions earlier this year, but completing the orders will depend on financing that the Iranians have not yet secured, the paper said.    

“The yards are making slots available to the Iranians starting in 2018 and 2019,” one of the people close to the issue said. “The Iranians are trying to make the 20% down payments through oil state-to-state deals to finalize the orders.”

If the oil deals work out with the South Korean government, Seoul can then give the necessary guarantees for the downpayment to the yards, the Journal added.

A second person said other options for down payments are being discussed and that he expects the orders to be completed by the end of the summer.

IRISL has signed a memorandum of understanding with Hyundai Mipo Dockyard, a subsidiary of shipbuilding giant Hyundai Heavy Industries Group, for up to 10 petroleum-product tankers and at least six so-called handysize bulk carriers.

Product tankers cost around $30 million each and handysize bulkers around $20 million apiece.

IRISL also is in talks with Hyundai Heavy for up to six 14,500 container ships which cost around $115 million each, the people involved in the talks said. 

IOOC is in advanced talks for at least five jack-up rigs with Daewoo Shipbuilding and Marine Engineering Co. at around $205 million each, the second person said.

“There is a [memorandum of understanding] in the works with DSME, but IOOC is also looking at other yards,” the person said. “Rig orders are rare these days as oil prices are low and offshore drilling is expensive, so there will be a race among major yards for the order.” 

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