SEOUL -- Asian builders risk losing Iranian infrastructure deals worth billions of dollars as the U.S. abandons a nuclear pact with the country and pressures companies to cut ties with Tehran.
South Korea's SK Engineering & Construction fears the impending U.S. resumption of economic sanctions on Iran may kill its $1.6 billion project to upgrade a refinery in Tabriz, roughly 600km northwest of Tehran. The SK Holdings unit signed an agreement last year with Tabriz Oil Refining, a subsidiary of Parsian Oil and Gas Development Group, to modernize the facility.
"We are afraid that we can lose the deal in the worst-case scenario," said Kwon Hyuk-chul, a manager at the engineering unit. "We have been working on financing the project, but now we just monitor how the situation is going."
Companies are not forced to comply with any new American sanctions imposed after President Donald Trump withdrew from the 2015 deal. But the U.S. could retaliate against businesses that maintain links with Iran.
Hyundai Engineering, an infrastructure affiliate of the Hyundai Motor group, faces an even costlier risk. The company struck a deal last year worth 3.1 billion euros ($3.68 billion at current rates) with AHDAF, an affiliate of National Iranian Oil, to construct facilities in southern Iran for producing ethylene, monoethylene glycol and high-density polyethylene -- key ingredients for the plastic industry.
The contract was the largest deal ever won by a South Korean builder. Korean state-run financial institutions also guaranteed to offer credit for the project, helping Hyundai reach the agreement.
Hyundai Engineering hopes to start the project without setbacks, having mobilized all of its resources to win the contract by dispatching employees to promote the company's technology and experience in the sector.
"I don't think that the deal collapses right now," a spokesman for the company said. "It is too early to predict its fate at this moment. We are paying attention to the developments."
Japanese energy and trading companies have similar concerns. Inpex, Mitsui & Co. and Mitsubishi Corp. have qualified to bid on Iranian oil and gas development projects, but they are considering dropping the effort.
"The hurdle to bid for the project has been raised for now. The situation is very serious," said Masahiro Murayama, senior managing executive officer at Inpex, the largest oil and gas development company in Japan.
Murayama told reporters Thursday that Inpex will refrain from bidding for the Azadegan oil field in western Iran should the U.S. impose tougher economic sanctions.
"We are seeing the risk growing in Iran as well as in the entire Middle East," a public relations representative at trading house Mitsui told the Nikkei Asian Review on Friday. "We will stay on alert and closely watch the situation."
Nikkei staff writer Akihide Anzai in Tokyo contributed to this report.