Total set to join $2bn oil project in Iran

The Times: Total is ready to join a $2 billion Iranian energy project led by Inpex, the Japanese state oil company, to develop part of the giant Azadegan oilfield. The Times

By Carl Mortished, International Business Editor

TOTAL is ready to join a $2 billion Iranian energy project led by Inpex, the Japanese state oil company, to develop part of the giant Azadegan oilfield.

The long-awaited launch of the Azadegan project, which had been expected to start in March last year, is likely to anger Washington, which is pressing for economic sanctions against the Teheran government. The issue of economic sanctions will be debated this week in the UN Security Council following Iran’s refusal to comply with a UN deadline to halt uranium enrichment by the end of last month.

Azadegan, located near the Iraqi border, is reckoned to contain some 26 billion barrels of crude. Negotations between Inpex and National Iranian Oil Company began in 2004 over a joint venture in which the Japanese would acquire a 75 per cent share of the oil prospect.

Wrangling over the terms of the deal and other delays have dogged the project. American pressure on the Japanese not to sign a deal has also been blamed for the slow progress.

“There are no longer differences over the price and an understanding has been reached,” said Hossein Kazempour Ardebili, Iran’s representative to Opec, at the weekend.

“Inpex, Total and the National Iranian Oil Company will execute the project,” he added.

Total is expected to take between 12 and 15 per cent of the project. The French multinational confirmed yesterday that it had an agreement with Inpex to acquire a stake in Azadegan when the project is launched, but a Total spokesman insisted this was not yet the case.

Inpex has recently come under intense pressure to agree terms to develop Azadegan, with Iran threatening to offer the oil prospect to Chinese or Russian rivals if a deal was not signed by this month.

Iran produces some 4 million barrels per day of crude and Japan is the biggest buyer. With no domestic oil resources, Japan is aggressive in its efforts to corner supplies overseas and has lobbied hard to exclude oil from any economic sanctions imposed on the Teheran government.

However, the rising tension between Iran and the West has encouraged Japan to reduce its dependence on Iranian oil, cutting imports from 385,000 barrels per day to 285,000 bpd in the last quarter. China imported 339,000 bpd in the second quarter of this year, while India takes 230,000 bpd.

Azadegan is expected to produce 150,000 bpd by mid-2008, rising to 260,000 bpd by early 2012. The Japanese hope to import two thirds of the field’s output.