Petroleum Business Review

Abstract This article examines how capital market instruments, particularly Islamic bonds (sukuk), can finance Iran’s petrochemical value chain through a hybrid Rial–foreign-currency model. The study is motivated by post-sanctions capital-market constraints in Iran, notably currency volatility and limited access to foreign funding, and by a gap in research on multi-currency Islamic financing solutions. It proposes a multi-layer financing structure combining Rial and foreign-currency Ijārah sukuk tranches and applies doctrinal legal analysis to the relevant Sharīʿah contracts and Iranian regulatory framework. To make the quantitative claims transparent, a stylised five-year quarterly model of an export-oriented methanol project is used. Under the illustrative assumptions, the annual weighted average cost of sukuk debt falls from 30.24% in an all-Rial structure to 20.07% in a 50/50 hybrid structure, while mean DSCR increases from 1.28x to 1.45x and the share of periods below 1.0x falls from 37.5% to 25.2%. The hybrid structure may broaden the addressable investor base, but actual implementation remains conditional on sanctions compliance, foreign-exchange approvals, transferability of export proceeds, and settlement arrangements.