Hyundai has signed a deal worth three billion euros ($3.2 billion) to invest in a major Iranian oil project, the South Korean firm confirmed on Monday.
Hyundai Engineering plans to invest 3.1 billion euros in the second phase of the Kangan oil production and refinery project in southwest Iran, it said in a statement.
The agreement marks one of the biggest investments since a 2015 nuclear accord between Tehran and world powers lifted global sanctions on Iran.
Iranian media said the deal was signed in Tehran by Hyundai Engineering CEO Sang Ruk Sang, who then headed south to oversee the launch of a new assembly line for the company’s Elantra car.
The report said Hyundai was partnering with Kerman Khodro for the new car factory, without giving further details.
The South Korean company will have nine months to secure financing for the oil project — a potential obstacle due to continued reluctance of international banks to engage with Iran.
Securing the funds through Korean banks will be “the most important and most difficult step”, said Asghar Arefi, head of Iran’s Ahdaf Investment Company which is partnering on the project, according to Shana news agency which is linked to Iran’s oil ministry.
“The start and execution of this project relies on 95 percent of the project’s financing coming from Korean banks (with) full support from the Hyundai Engineering Company in securing those funds,” Arefi told Shana.
However, a Hyundai Engineering spokesman told AFP that 85 percent of the funding would come from Korean lenders, including Export-Import Bank of Korea and the Korea Trade Insurance Corporation.
The second phase of the deal, involving the construction of four production plants at the Kangan site, is expected to take four years.
Iran has signed initial oil deals with European firms Total and Shell in recent months, potentially worth billions of euros.
But doubts persist over how these deals will be financed given the reluctance of global banks to return to Iran, and fears that the US may reimpose sanctions lifted under the nuclear deal.