Japan is eyeing an oil deal with Iran that could strain ties with the United States, which is trying to isolate Tehran for allegedly sponsoring terrorism, officials said on Monday.
At stake is an agreement valued by media reports at $2-2,5-billion that would give energy-hungry Japan an opportunity to explore and develop what is believed to be Iran’s largest oil field.
A consortium of three Japanese companies — Tomen and two units of a state-owned oil corporation — have been carrying out talks to secure rights to the Azadegan field for about two years, said Koichi Koiwai, a Tomen spokesperson.
The two sides originally hoped to reach an agreement by the first half of this year, according to Japan’s Foreign Ministry.
Media reports said they could be wrapped up in Tehran this week.
But the talks fly in the face of efforts by Washington to discourage investment in Iran’s oil industry, and US officials
including Secretary of State Colin Powell have reportedly urged the Japanese government to reconsider the deal.
Seiji Murata, vice minister of Japan’s Trade Ministry, acknowledged on Monday that Japan and the United States had ”been in contact” about the project. But he said the bilateral discussions ”won’t necessarily” have an impact on the negotiations.
Tokyo secured priority bidding rights to develop the Azadegan field in late 2000 and agreed in 2001 to spend US$10-million to help pay for a seismic study.
When officials signed the agreement in Tehran in July 2001, Japan’s trade minister said that his nation ”is not affected by US pressure”.
An agreement was not likely to be welcomed by Washington, however.
The Iran-Libya Sanctions Act, enacted in 1996 and extended by US President George Bush for another five years in 2001, threatens to punish foreign companies that invest more than US$40-million in Iran’s oil and gas industry, according to the State Department’s internet site.
US companies are prohibited from engaging in any commercial transactions with Iran, it said.
But Japan, a nation that has virtually no oil and depends heavily on imports to meet its energy needs, is lured by the prospect of getting a shot at developing what is believed to be Iran’s largest oil field.
Currently, Japan drills only about 10% of the oil it uses, said Toshinori Ito, an energy analyst with UBS Warburg in Tokyo. Energy planners suffered a setback in February 2000 when they failed to renew a part of a 46-year-old contract to operate the Khafji field in the neutral zone between Saudi Arabia and Kuwait.
The Azadegan field, located in south-western Iran, has reserves estimated at 26 billion barrels of oil and could make up for the loss of Japanese interests in Khafji.
”It’s impossible to evaluate the project until drilling begins, but this would unquestionably be one of the largest scale energy explorations to be undertaken by Japan,” Ito said.
Iran is already Japan’s third-largest supplier of crude, providing about 14% of the 4,17-billion barrels imported by the world’s second-largest economy in fiscal 2002, according to the trade ministry.
Two units of the Japan National Oil Corporation, a state-owned corporation that finances exploration and stockpiles oil reserves, are taking part in the talks.
A spokesperson for the Japan Petroleum Exploration Company would say only that his company was involved. A spokesperson for Impex Corporation declined to comment. – Sapa-AP