Doing business with Iran: no easy choice | Business| Economy and finance news from a German perspective | DW | 16.10.2017
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Doing business with Iran: no easy choice

Many foreign firms have decided to strengthen business ties with Iran after the easing of sanctions on Tehran. But the US president's announcement to decertify the 2015 nuclear deal may get them into trouble.

Following the easing of international sanctions against Iran in 2016, the Islamic nation signaled it would need a lot of foreign investment to modernize its infrastructure after a decade of isolation. Tehran also said it was seeking new technology to upgrade some of its key industries.

Foreign firms have been taking their time to weigh investment opportunities in Iran as uncertainties over the United States' sanctions policy have remained. Hence we've seen only a handful of proper business deals so far, while there's been no lack of memorandums of understanding between foreign and Iranian business partners.

There are three major sectors where the biggest advances have been achieved so far. Here's what's happened in the oil and gas industry:

In November 2016, France's Total became the first oil major to sign a big deal with Tehran since the country was readmitted to the world's international trade markets, with the French company agreeing to help Iran develop the world's largest gas field, South Pars.

Shell for its part signed a provisional deal to develop the South Azadegan, Yadavaran and Kish gas fields.

Russia's Zarubezhneft inked a memorandum of understanding (MoU) for a feasibility study on two joint fields in the western part of Iran.

Total refinery (picture-alliance/dpa/W. Grubitzsch)

France's Total is confident its investment in Iran will pay off

BASF's Wintershall exploration subsidiary has an MoU with the National Iranian Oil Company, saying earlier this year it was in talks with Tehran about a possible investment in the country.

Iran has also set out to renew its aging aircraft fleet and invest in airport infrastructure as it expects sharp growth in its underserved aviation market.

Flag carrier IranAir has already ordered 100 planes from Airbus, while Boeing has a deal to sell 80 aircraft. It has also been announced that Boeing will deliver 30 737 MAX planes to Iranian company Aseman between 2022 and 2024.

IranAir plane (picture-alliance/AA/F. Bahrami)

IranAir is hoping to expand its operations quickly in a dynamic market

In addition, Tehran has been eager to find foreign partners for the modernization of its railway system.

China National Machinery Import and Export Corporation signed a deal in May with Iran's MAPNA for the electrification of a high-speed rail line between Tehran and Mashhad.

French train maker and manufacturing giant Alstom inked a deal in July for a joint venture that will build metro and suburban rail carriages in Iran.

Last but not least, Siemens signed a contract in October of last year to upgrade Iran's railway network and deliver locomotives to the country.

PSA, Renault and Volkswagen are among the carmakers which have moved to resume their pre-sanctions partnerships with Iran.

Donald Trump's confrontational policy toward Iran and the 60-day window for Congress to reimpose sanctions against Tehran are bound to heighten caution among many Western and Asian companies that are planning to do business or are already doing business with Iran.

hg/jd (Reuters, AFP)

 

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