South Korea’s export credit agency has agreed to finance a US$1.6bn oil refinery in Iran.

The Export Import Bank of Korea (Kexim) will finance the project, which will be undertaken by SK Group, a Korean engineering and construction company.

Tabriz Oil Refinery is in Iran’s northwest and the project will focus on increasing its capacity to produce gas and diesel. It currently produces 100,000 barrels of oil per day. The upgrade will take three years to complete, and continues the deepening of oil-dependent Korea’s relationship with Iran.

Iran became South Korea’s second-biggest oil provider in the first quarter of this year, after exporting record levels of oil to the East Asian manufacturing hub. A year earlier, it ranked fifth, behind Saudi Arabia, Iraq, Kuwait and Qatar.

The latest Kexim financing is part of an overall US$13bn FDI package for Iran the Korean government agreed last year. Kexim provided US$8bn of it in the form of a line of credit for use in energy infrastructure projects in June.

Meanwhile, even as the US tightens sanctions on Iran, investment is flooding in from other nations. German conglomerate Siemens announced this week that it would invest US$3bn in Iranian projects in the power and rail sectors. This came as the Iranian government announced plans to purchase 45 helicopters from French company Airbus.