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Energy: Iran and Malaysia Tie the Knot

Source: Press TV

Iran is to build a refinery/petrochemical complex in Malaysia despite increasing US scrutiny of energy deals between the two countries. Also, Malaysia is set to invest up to $14 billion in Iranian energy projects, two of which will deal with the development of gas fields.

A contract was signed Tuesday in Kuala Lumpur between Iran's Hampa Engineering Corporation and a Malaysian firm, IRNA reported.

The refinery and petrochemical complex will be constructed in the Malaysian state of Terengganu over a period of six years and will reportedly cost nearly 5 billion Euros.

The refinery will manufacture gas-oil, gasoline, jet fuel, LNG and petrochemical raw materials; any surplus production will be exported.

Malaysia's increasing commercial ties with Iran have worried Washington, which has banned US firms from doing business with Tehran.

In January, the head of a key committee reporting to the US Congress called for a halt to trade talks with Malaysia after Malaysian SKS Ventures reportedly signed a preliminary deal to develop Iran's Golshan and Ferdows gas fields and produce liquefied natural gas.

Malaysia to invest $14b in Iran energy

"Malaysia will invest five to six billion dollars via buy-back contracts in two Iranian gas fields," Iranian Minister of Petroleum Gholam-Hossein Nozari announced Monday, citing the southern Iranian gas fields of Golshan and Ferdows.

Malaysia reportedly intends to invest on several additional projects in the Iranian energy sector that will bring the total amount of new investments in the country to about $14 billion.

Iranian buy-back contracts require that international companies develop oil fields and after a period of production, the field is returned to the National Iranian Oil Company (NIOC).

Companies that enter such contracts with Iran yield returns by extracting and selling oil and gas in the period in which they hold the fields.

According to the Iranian government, buy-back contracts provide sufficient incentives for international companies to be compelled to invest in the country.

Malaysia has been seeking energy links with oil-rich Iran and has offered the country a minority stake in the $2.2 billion Kedah refinery currently being developed by Malaysian SKS Development.

"Iran and Malaysia have also signed an agreement to jointly invest on the construction of refineries in various countries, such as Indonesia and Syria," the Iranian energy official added.

The revelation that Malaysia will invest in Iran comes amid an official visit to Tehran by former Malaysian prime minister Mahathir Mohamed.

... Payvand News - 12/03/08 ... --

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