Iran Waits for Japan on Oil Deal

Iran has warned Japan that it has only two more days to give a final answer on the two billion dollar contract to develop the Islamic republic's largest onshore oil field.  Government spokesman Gholam Hossein Elham said that if no positive answer was forthcoming, Tehran would seek another partner to develop the Azadegan oil field in southwestern Iran close to the Iraqi border.

"There are just one or two days left.  If the negotiations end in an agreement we will continue, otherwise there is another way," he told reporters.  "The oil ministry will not wait and will use the means that it has and will enter into negotiations with firms that have the capacity to do this work."  His comments came as officials from the National Iranian Oil Company (NIOC) and Japanese firm Inpex pressed on with last-ditch negotiations to finalize the deal after missing yet another deadline for an accord on Saturday.  "If there is no agreement with the Inpex officials in these negotiations, I do not think that we will give them a new deadline," NIOC managing director Gholam Hossein Nozari said.

Oil Minister Kazem Vaziri Hamaneh said Iran would announce its decision on whether to go ahead with the project with a Japanese partner in the next few days amid mounting complaints from Tehran over delays to the start-up.  The head of the Iranian parliament's energy committee, Kamal Daneshyar, also claimed on Saturday that Tehran would cancel the contract and carry on with the project with an Iranian contractor.

Japan's new Trade and Industry Minister Akira Amari has warned against hoping for any immediate breakthrough but also said Iran is in a "situation where it cannot throw out the deal so easily."  The deal is seen as important for Iran's integration in the world economy at a time when it is threatened with United Nations sanctions over its nuclear program to add to the strict US trade embargo it already endures.  The contract was signed in 2004 by Inpex Corp., a Japanese oil exploration company that is supported by the government but also has private stakeholders.  Iran and Inpex had set a final deadline of September 15 but failed to reach agreement on profit-sharing and the increasing cost of the project, instead setting a new deadline of the end of last month.  Work was meant to start on the oil field by March 2005.

Japanese media have also reported Tokyo is reconsidering the project after pressure from its key ally Washington, which believes Tokyo should not be cutting deals with Tehran amid concerns over its nuclear program.  Iran insists its nuclear program is solely for peaceful energy needs, vehemently rejecting US allegations it is seeking to manufacture nuclear weapons.  The deal, signed in February 2004, targets production of 260,000 barrels per day of oil from Azadegan.