Iran, holder of the world's fifth-largest oil reserves, and a Japanese government-backed group are close to an agreement to tap the Middle East nation's biggest oil find in 35 years, sources familiar with the talks said.
Meanwhile, the US is putting pressure on Japan to pull out of the US$2.5 billion agreement to pump oil from Iran's Azadegan field, scheduled for signing within the next few days, the Financial Times reported, citing an unidentified US official.
Tomen Corp, based in Osaka, and two units of Japan's state oil company may invest ¥300 billion (US$2.5 billion) to pump 300,000 barrels a day over two decades from the deposit, one of the sources said.
That amount is almost half of Iran's exports to Japan, which has no oil reserves of its own. Both sides want a deal on the Azadegan field by a deadline tomorrow, the sources said.
"It's a huge field -- Iran wants to develop this field quickly," said Manouchehr Takin, a former employee of Iran's state oil company and now an analyst at London's Centre for Global Energy Studies. Azadegan may have as much as 6 billion barrels of recoverable oil, he estimates.
Japan, the world's second-largest oil importer, is looking for new supplies after losing the right to pump crude from the neutral zone between Saudi Arabia and Kuwait. Stifled by US sanctions that limit possible investment, Iran needs foreign cash to expand its oil industry to meet rising demand.
The field has reserves of at least 26 billion barrels and lies in the southwestern Khuzestan province, close to the Iraqi border, Iran said when the find was disclosed in September 1999.
"A field that has hundreds of millions of barrels, or billions of barrels, is a wonderful thing for any company, especially Japanese companies who want a guaranteed supply," Takin said.
Japan's state-controlled Inpex Corp, Japan Petroleum Exploration Co and the publicly-traded trading company Tomen submitted bids in June of last year to develop the field, which may become Iran's second-largest.
Inpex and Japan Petroleum Exploration are units of the state-owned Japan National Oil Corp.
Tomen is Japan's seventh-biggest trading company.
Yutaka Inoue, manager of public affairs at Inpex, wouldn't comment. Japan National Oil's spokesman, Akihiro Watanabe, and Japan Petroleum Exploration's spokesman, Ken Shimomura, said Inpex is leading the negotiations. Yuzo Takeshige, a Tomen official involved in the talks, wouldn't comment.
Iran plans to issue a tender inviting international companies to work in north Azadegan, outside the area specified for Japanese companies, Iran's oil minister, Bijan Zanganeh, said in an interview earlier this month.
Iran's constitution forbids foreign companies from holding rights over the country's natural resources. Instead, so-called buyback agreements allow foreign companies recover their investment at an agreed rate of return from the field's output.
Total SA of France in 1995 became the first foreign company to sign a petroleum development agreement with Iran since the Islamic revolution 16 years earlier. Other European companies such as Royal Dutch/Shell Group have followed.
US companies are barred from most investments in Iran, which the US has accused of sponsoring terrorism. Iran denies the accusation. Pressure is mounting from the US and Europe on the country's government to stop work on its nuclear program.
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