BANGKOK (Bangkok Post) — Siam Cement Plc's $225-million petrochemical project in Iran is back on track after a delay caused by conflict over Teheran's nuclear program.

"The recent conflict has resulted in the operation beginning one year behind the original schedule," said Cholanut Yanaranop, president of Cementhai Chemicals Co, the petrochemical flagship of Siam Cement.

He said the project was originally planned to come online in early 2008 but would now begin late the same year.

The launch of construction follows an easing of the nuclear dispute between the United States and Iran and a solution to minimize the risk of moving money in and out of the Muslim country.

"We (the project operator) have opened an escrow account offshore and use it as a tool to move the money facilitating the project," said Mr Cholanut.

Siam Cement, Thailand's largest industrial conglomerate, holds a 38% stake in the $225-million Mehr petrochemical project in Iran. It is intended to produce high-density polyethylene (HDPE), with a capacity of 300,000 tons per year.

Other shareholders in the venture are National Petrochemical Co of Iran with 40%, Itochu Corporation of Japan (12%) and Thailand's PTT Chemical Plc (10%).

Earlier, the project came under pressure when Washington reportedly lobbied for operations to halt because of the dispute over Iran's nuclear program.

Mr Cholanut said Siam Cement projected a slowdown in its chemical business, which had become a major money spinner over the past two years.

He said earnings before interest, taxes, depreciation and amortization (EBITDA) in the fourth quarter this year would decline from a peak in the third quarter.

In the third quarter, the company posted revenue of 32.7 billion baht and EBITDA of around seven billion baht.

Its average sales margin in the fourth quarter of this year is estimated at U.S.$700 per ton of ethylene, down from $730 in the previous quarter. However, the margin would still be higher than in the second quarter which was $580, and $560 in the first, according to Mr Cholanut.

The average sales margin for the full year is estimated at $650 per ton compared to $570 last year.

"Next year's margin and revenue are expected to decline from this year to similar levels as those recorded in 2005," he said.

Currently, the petrochemical business contributes 40-50% of the net profit of Siam Cement, Mr Cholanut said.

Siam Cement's petrochemical business reported total sales of 86.08 billion baht last year, up 15% from the previous year, given growing global demand as well as supply delays from China and Iran.

Mr Cholanut said the slowdown this year was due mainly to the decrease in petroleum prices and more balanced supply and demand in the market.

He said global demand for ethylene in Asia was expected to increase by six million tons, nearing the new production capacity of 5.8 million tons.

Global capacity of ethylene production next year is projected to reach 120 million tones, slightly outpacing the demand of 105-110 million tons.