Japan holds off on Iran oil deal on nuclear worry
Date: 01-Jul-03
Country: JAPAN
Author: George Nishiyama
The controversy over the $2 billion deal to develop Azadegan, one of the world's biggest untapped oil fields, has put resource-poor Japan in a bind as it seeks to balance its thirst for oil with a staunch security alliance with the United States.
Chief Cabinet Secretary Yasuo Fukuda said that the deal to develop Azadegan was important for Japan's energy needs, but noted there were concerns over Iran's nuclear programme.
"Crude oil is very important for Japan, but on the other hand, the nuclear development issue has turned into a big international concern," Fukuda told a news conference.
"I don't think there will be a contract ignoring (such concerns)," he said. "We will make a final decision looking at future developments," he said, adding that Japan was urging Iran to try to clear up suspicions over its nuclear programme.
Japanese officials have declined to confirm reports that the United States was pressuring the Japanese government-backed consortium to back out of the deal in order to boost pressure on Tehran to open its nuclear sites to inspections.
Trade minister Takeo Hiranuma told a separate news conference that negotiations were continuing but that he could not say for certain when a deal would be signed.
"We are making wholehearted efforts on negotiations," he said.
Iranian Oil Minister Bijan Zanganeh said last month a $2 billion deal for Azadegan could be signed with a Japanese consortium by early July.
But Japan's Kyodo news agency quoted U.S. State Department spokesman Richard Boucher as saying in Washington yesterday: "It is highly inappropriate to proceed with talks on new oil fields or gas at this time."
TALKS STILL ON
An Iranian official confirmed yesterday that the talks were still on.
"Negotiations on the development of the Azadegan oil field are still continuing between this company and the Japanese companies," the official IRNA news agency quoted Oil Development and Engineering Company head Abolhassan Khamoushi as saying.
"Agreements have been achieved on some issues like the production ceiling, but agreements on the project cost have yet to be achieved," said Khamoushi, whose company is affiliated with the Oil Ministry.
The United States, which accuses Tehran of seeking nuclear weapons, has placed sanctions against Iran that prohibit U.S. firms from investing in the country, branded by Washington as part of an "axis of evil".
Japan, however, has never been comfortable with the inclusion of Iran in the triad along with communist North Korea.
The consortium includes the government-backed Japan Petroleum Exploration Co (JAPEX), Japan's Indonesia Petroleum Ltd (INPEX) and Japanese trading house Tomen Corp, which today declined to comment on the state of play.
The portion of the Azadegan oil field that could be developed by Japan is expected to yield 300,000 bpd.
Japan has been keen on the deal, agreement on which was reached during a visit to Tokyo by Iranian President Mohammad Khatami in late 2000, to help make up for losing a 40-year-old oil concession in the Saudi Arabian section of the Neutral Zone.