It has been announced that Malaysia and Iran have formed a joint venture, SKS_PARS, to develop oil and gas projects in both countries.
The two countries have initially signed memorandums of understanding for two investments, totaling some USD7bn, for gas condensates refining in Iran’s Shiraz Refinery in Fars province and an oil refining project at Kedah in Malaysia.
Construction of the Malaysian plant is said to entail a budgeted investment of around USD4.8bn. A total of 60% of this amount will be subsidized by both parties, while the remainder is to be sourced from borrowings. The Malaysian company, Petrofield, will provide 40% of the required investment for the construction of the oil refinery in Iran.
According to reports, the Malaysian government has provided Iran with tax exemptions and the suspension of tariffs for the import of the necessary equipment. The Iranian government is also to grant preferential treatment to Malaysia.
Malaysia and Iran are also said to be discussing an acceleration of development at Iran’s Ferdowsi and Golshan gas fields. Iran needs to increase its refining capacity as it currently has to import a large proportion of its oil product requirements.
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