Iran gives new warning to Japan to finalise oil deal

TEHERAN – AFP- Iran on Wednesday issued a new warning to Japan to swiftly finalise a two-billion-dollar deal to develop its onshore oil field of Azadegan or see the project handed to a domestic contractor.

“If the Japanese response for development of this oil field is negative, the development operations will start through domestic sources,” Oil Minister Kazem Vaziri Hamaneh said, just two days before an extended deadline expires.

On 15 September, Iran extended a repeatedly stretched deadline by another two weeks for Japan to start the development work of the field, which was initially due by March 2005.

The oil minister also ruled out the possibility of holding a new international tender for Azadegan, saying: “We prefer to develop the field by ourselves”.

Speaking on state television however he expressed hope that Japan gives a “positive answer”.

In February 2004, Iran and Japan’s Inpex Corp. signed an agreement for the development of Azadegan, the Islamic republic’s largest onshore oil field with an estimated 26 billion barrels of oil.

Iran, facing the threat of sanctions for its nuclear program, has warned Japan, a close US ally, not to give in to US pressure to scrap the mega deal.

The United States has called for Japan to abandon the deal as Washington seeks UN sanctions on Iran over its controversial nuclear programme.

Iranian officials have insisted that they would not accept new terms to increase the cost of the project which has been held up by the process of clearing landmines left from the 1980-88 Iran-Iraq war.

Tokyo so far has expressed willingness to finalize the deal because of Tehran’s major energy supply role to Japan, which imports about 15 percent of its total oil consumption from Iran.

Asked about another Iranian oil field development project under negotiation with China, Vaziri Hamaneh said talks were still in progress even though a final agreement was supposed to have been reached by March 20.

“It is not clear when talks on Yadavaran will be finalised,” he said, adding: “We are trying to conclude these negotiations as soon as possible because even one day sooner is very important for Iran.”

However, the deputy oil minister for international affairs has said Iran and China would finalise the agreement within two months.

“The two sides agreed on the master development plan of Yadavaran in the last round of talks and negotiations to finalise the contract’s text are expected to end in less than two months,” Hadi Nejad-Hosseinian was quoted as saying by the energy news agency Shana on Monday.

In late October 2004, Iran and China’s Sinopec inked an agreement to develop the Yadavaran onshore field that is estimated to hold more than 3 billion barrels of recoverable crude.

When the multi-billion dollar deal is finalised, China will have a 51-percent share in the project. The agreement also involves China’s purchase of 10 million tons of Iranian liquefied natural gas for a 25-year period to start in 2009.