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Iran’s dealmaking with Europe: the seven biggest contracts

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Deals worth nearly €40bn were struck during the Iranian president’s four-day visit to Europe after the lifting of sanctions

The Iranian president, Hassan Rouhani, meets French president François Hollande
The Iranian president, Hassan Rouhani, meets the French president François Hollande. France and Italy have led the way in cementing post-sanctions deals. 

Airbus €22bn (£16.8bn)

Aiming to renovate its ageing air fleet after years of sanctions, Iran Air has ordered 118 commercial passenger planes including 12 Airbus A380s, the world’s largest jet airliner.

In total, there are 73 wide-body and 45 single-aisle aircrafts on the list. Iran has signalled that it needs as many as 500 new planes, and other companies such as Boeing are considering whether to do business with the country.

“The deal with Airbus is one of the largest foreign contracts ever signed in the history of the Islamic Republic,” Iran’s minister for roads and urban development, Abbas Akhondi, said in Paris after the deal was announced. “We’d like to restructure Iran Air and bring it back to the market which can compete with other airlines in the region. Certainly we can do this within five to seven years.”

Airbus’s chief executive, Fabrice Brégier, said the skies had “cleared for Iran’s flying public and Airbus is proud to welcome Iran’s commercial aviation back into the international civil aviation community”.

Danieli €5.7bn

The Italian metal industry firm has signed a contract to supply heavy machinery and equipment to Iran.

Saipem €3.5bn

The Italian oil and gas contractor has agreed a deal to revamp and upgrade the Pars Shiraz and Tabriz oil refineries.

An Iranian worker assembles a Peugeot 206 at the state-run Iran Khodro plant near Tehran
An Iranian worker assembles a Peugeot 206 at the state-run Iran Khodro plant near Tehran.

Peugeot €400m

The French car maker made a deal for a joint venture with the Iranian vehicle manufacturer Khodro to modernise a car factory near Tehran, where three new Peugeot models will be manufactured. The two companies worked together before sanctions, and the project will produce 100,000 vehicles a year starting in late 2017.

Total

The oil giant signed a contract with the national Iranian oil company to buy as many as 200,000 barrels of crude oil per day (€6.6m at current prices), according to the French firm’s chief executive, Patrick Pouyanné.

Aéroports de Paris and Bouygues

The French company will assist in the construction of a second terminal at Tehran’s Imam Khomeini international airport. Akhondi said: “Imam Khomeini airport is located in the best place in the region and with contracts that we have signed with Aéroports de Paris, we are building a city airport to make it a regional hub and to establish Tehran [as an] international financial centre.”

Vinci

The Italian construction firm will develop a new terminal at Shahid Hashemi Nejad airport in Mashhad, north-east Iran.

An Iran Air Boeing 747 at Mehrabad airport in Tehran
An Iran Air Boeing 747 at Mehrabad airport in Tehran. The airline has signed a deal with Airbus to begin replacing its ageing fleet.

The obstacles that still lie ahead …

Despite the deals and the desire of European governments to begin trading with Iran, financing remains a big issue as major European banks remain reluctant to handle Iranian payments, deterred by previous huge fines from the US treasury. Nuclear-related sanctions have been lifted but other US measures relating to terrorism and human rights are still in place.

Andreas Schweitzer, senior managing director at the investment firm Arjan Capital, which is active in Iran, said banks, especially those with a big US presence, were unlikely to support large transactions “because there is too much US uncertainty about secondary sanctions”. He said smaller banks or those unconcerned about the US market would be the first to do business with Iran.

“Iran is a large market with growth potential, there is a big potential but it comes with a few obstacles on the way which are not unsurmountable,” he said. “But if you come to Iran you have to bring some money, you have to bring a little bit of good nerves and bring some patience and if you’re willing to do that you’re fine, and if you’re not willing to do that you’ll be an unhappy visitor.”

by:theguardian

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