South Korean companies are expecting to find a slew of business opportunities in Iran as the lifting of sanctions on the oil-rich nation could open up new investments to rebuild its battered economy, industry officials said.
The U.N. nuclear agency certified that Iran has met all of its commitments under last summer's landmark nuclear deal to crimp Tehran's ability to make atomic weapons. For Iran, the move lifts Western economic sanctions that have been in place for years, unlocking access to frozen assets and resuming energy exports.
Iran holds the world's fourth-largest oil reserves and the second-largest gas reserves, but international sanctions have stymied progress across its energy sector.
Local construction companies have pinned hopes on new projects as Iran is set to make big investments to replace aged gas and oil facilities and major infrastructure.
"Iran was one of the major trading partners before the sanctions and had good relations with Korean companies," said Eom Chi-sung, an official at the Federation of Korean Industries. "As the Iranian government is expected to expand investment in infrastructure, several construction and plant projects are expected to be up for grabs (for Korean companies)."
According to a recent survey by the Korea Trade-Investment Promotion Agency (KOTRA) on 521 Iranian companies, 90 percent of respondents said they plan to expand trade with Korean companies following the sanctions relief, citing reasonable price and quality of products.
In the past decades, South Korean builders had clinched deals worth US$12 billion with Iran, but since 2009, there have been few deals due to the economic sanctions that the United Nations imposed for its nuclear weapons program in 2010.
The Korea International Trade Association (KITA) projects that Iran's construction market will reach $154 billion in 2016, sharply up from $88.7 billion in 2013.
Steelmakers and airlines are also positioned to benefit from low oil prices as Iran's crude oil will flow into the global market, further driving down already low oil prices.
Korean refiners are seeking ways to diversify their import lines, which will eventually help them improve their earnings.
Last year, only two refiners — SK Innovation Co. and Hyundai Oilbank Inc. — imported Iranian oil, except S-Oil Co., which is owned by Saudi Arabia's state-run oil company, Saudi Aramco.
"We have closely monitored the situation as it was widely expected the Iranian sanctions were soon to be lifted," said an official at a refiner in Seoul. "Diversified sources of crude oil are expected to give more leeway to stockpile management."