July 14, 2015 / 12:24 PM / 2 years ago

German exporters see opportunity in Iran, no El Dorado

FRANKFURT/BERLIN, July 14 (Reuters) - Germany's exports to Iran could as much as quadruple in the next few years as a result of a nuclear deal reached between Tehran and six world powers, German industry associations said.

It will be a tough market for German companies in the face of competition from Chinese, Korean, Middle East and other rivals that filled the void left by Western companies prevented from trading under U.S.-led sanctions against Iran.

But from industry heavyweights such as Volkswagen and Siemens to thousands of smaller family-owned firms, German companies are keen to reclaim their once-dominant role in exports to Iran.

"The modernisation of the oil industry in particular opens big opportunities for German machinery and equipment makers," the head of the BDI Federation of German industries, Ulrich Grillo, said in a statement on Tuesday.

He forecast German exports to Iran could leap to more than 10 billion euros ($11 billion) "in the medium term" from 2.4 billion last year, seeing the car, chemical, healthcare and renewable energy industries as other likely beneficiaries.

Under the deal agreed on Tuesday after more than a decade of negotiations, U.S., EU and U.N. sanctions will be lifted in return for Tehran imposing long-term curbs on nuclear activities, which the West has suspected are aimed at making an atomic bomb.

The export chief of Germany's DIHK chambers of trade and commerce, Volker Treier, said the country's exports to Iran could now double to about 5 billion euros within just two years, not the five years he forecast in February.

Speaking to Reuters by telephone from Tehran, he said 80 German companies had subsidiaries in Iran and another thousand had representatives there.

German exports to Iran slumped from a high of 4.4 billion euros in 2005 to 1.8 billion euros by 2013. However, in an apparent anticipation of an easing of sanctions, they jumped 30 percent last year, driven by sales of machinery, agricultural products and pharmaceuticals.

The head of Numov, the German Near and Middle East Association, urged Berlin to send a minister to Tehran soon.

"A trip by a minister would be very important to support German business," said Helene Rang. "It mustn't happen that German business is disadvantaged in comparison to others when the country opens up."

German economy and energy minister, Sigmar Gabriel, is said to be planning a trip to Tehran this month, according to political sources, but the visit has not been confirmed.

Engineering association VDMA, whose members accounted for more than a quarter of Germany's exports to Iran last year, said the Iranian market offered interesting prospects but cautioned that it was "no El Dorado".

Klaus Friedrich, VDMA's Iran and embargoes expert, said Germany could hope in the medium term to win up to 15-20 percent of a potential 8 billion euros in international machinery exports to Iran annually, up from 5 billion last year.

"Even in the most optimistic scenario, Chinese engineering firms will keep more than 10 percent market share, Korea will fiercely defend its newly won share, and don't forget the United States is back in play," Friedrich said. ($1 = 0.9077 euros) (Reporting by Georgina Prodhan, Rene Wagner and Andreas Rinke; Editing by Susan Fenton)

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