Iran’s Isfahan Refinery Remains Open as Debt Payments Discussed

Iran’s refinery in Isfahan is still operating as it holds talks with Isfahan Petrochemical Co. on payments owed, a spokesman for the oil company said.

Isfahan Oil Refining Co. stopped supplying feedstock to the chemical plant after debts rose to more than 2.4 trillion rials ($196 million), according to Mohammad Sadeq Hajian.

“Both companies had a meeting in Tehran last week to discuss about possible ways for clearing debts,” Hajian said today in a phone interview. “But as officials of Isfahan Petrochemical were insisting that they don’t have enough money to settle even a small share of the debts, officials of Isfahan refinery didn‘t agree to start providing them with feedstock.”

The petrochemical producer halted operations because of insufficient funds to buy feedstock, pay wages and settle overdue debt, state-run Mehr news agency reported Sept. 2. Tehran Times said Sept. 11 that the 370,000 barrel-a-day refinery also shut, citing a statement from the oil company.

“Our operation has never been shut and we have no debts to pay,” Hajian said. “Arak Petrochemical Co. and Sepahan Oil Co. in Isfahan are still buying feedstock from us.”

Iran is facing declining income from energy sales amid international sanctions against buyers of its oil. The U.S. and allied nations imposing embargoes have said Iran’s nuclear program may include efforts to develop atomic weapons. The Islamic republic denies the charge and says it wants nuclear expertise for civilian use.

To contact the reporter on this story: Yeganeh Salehi in Tehran at yalehi@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net