24 October Dow Jones

Japan, Iran To Ensure Progress For Azadegan Oil Project

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Japan and Iran agreed Tuesday in their second round of bilateral energy talks that they will ensure smooth progress in talks on developing Iran's giant Azadegan oil field, said an official at Japan's Ministry of Economy, Trade and Industry.

"We confirmed that the Azadegan project is a symbol of the friendly relationship between Japan and Iran. We agreed to press forward to begin negotiations as initially scheduled," the official said.

In the vice-ministerial meeting in Tokyo, Hirobumi Kawano, director-general of METI's Resources and Energy Agency, met with Seyed Mehdi Mirmoezzi, Iran's deputy oil minister and vice chairman of the National Iranian Oil Co. . A Japanese consortium led by Inpex Corp. has priority rights to discuss the appraisal and development of "a specific area" of the Azadegan field with NIOC. The group presented a proposal for the project to Iran at the end of June.

The consortium has one year to set negotiations for a final contract. NIOC has said Iran has given the consortium the green light to bring in Royal Dutch/Shell as a partner, but details weren't available. The state-run Japan National Oil Corp., which the government plans to dissolve as part of its structural reform, is to provide support for the Azadegan project.

Kawano told Mirmoezzi that Japan will continue to provide "active" support for the Azadegan project, regardless of the fate of JNOC, the METI official said.

The Azadegan field, located in southwest Iraq near the border with Iraq, is viewed as one of the largest in the Middle East, with estimated reserves of more than 26 billion barrels of oil. The Iranian side told Japan that oil supply is a top priority under any circumstances, in order to contribute to a stable international oil market, said the METI official.

Iran, the second-largest producer in the Organization of Petroleum ExportingCountries, is the third-largest oil supplier to Japan after the United Arab Emirates and Saudi Arabia. Japan and Iran agreed that Tehran will host a third round of bilateral energy talks in the autumn of 2002, the official said. In their first ever bilateral energy talks in August 2000, Japan and Iran agreed to further strengthen their cooperation in the energy sector.

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