Iran General NewsInpex may cut stake in $2.5 billion Iran oil...

Inpex may cut stake in $2.5 billion Iran oil project

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Bloomberg: Inpex Holdings Inc., Japan’s biggest oil explorer, may agree to cut its 75 percent stake in Iran’s Azadegan oilfield to salvage a share of the $2.5 billion project, the Middle East country’s largest discovery in 30 years.
By Megumi Yamanaka

Oct. 6 (Bloomberg) — Inpex Holdings Inc., Japan’s biggest oil explorer, may agree to cut its 75 percent stake in Iran’s Azadegan oilfield to salvage a share of the $2.5 billion project, the Middle East country’s largest discovery in 30 years.

Government-controlled Inpex is in talks with National Iranian Oil Co. and may reduce the concession, Japanese Trade Minister Akira Amari told reporters in Tokyo today. Inpex has been removed from the project because of delays in development and is trying to keep a 15 percent stake, Iran’s oil ministry-owned Shana news agency reported yesterday.

Iran has said it may revoke a 2004 contract with Inpex and open up participation in the project to other international oil companies. The Middle East nation is trying to ward off sanctions demanded by the U.S. for its nuclear development program and may strengthen ties with countries such as China and Russia by allowing greater access to the oilfield, said Tomomichi Akuta, an energy researcher at UFJ Institute Ltd.

“China and Russia are freer to act against what the U.S. says, while it’s hard for Japan to,” Akuta said by phone today. “From Iran’s point of view, countries such as China have more credibility when it comes to implementing oil projects under the current circumstances.”

Japan’s government, which has a 29.4 percent stake in Inpex, on Oct. 2 said it will withdraw support for the Azadegan project if the United Nations imposes sanctions on Iran because of its nuclear program.

Reduced Concession

Amari declined to confirm or deny whether Tokyo-based Inpex has been removed from the project. Kunihiko Matsuo, the company’s chairman, is in Iran for talks and the company may make a statement soon, Amari said.

“It’s possible to have a reduction in the concession,” Amari said. “They’re talking about several things including shares of the project.”

Inpex won the right to lead development of the oilfield in February 2004. The company has said it can’t start work until Iran removes landmines laid during the 1980-1988 war with Iraq. The dispute over Iran’s nuclear program has increased scrutiny of Japan’s role in Azadegan.

Inpex spokesman Shuhei Miyamoto declined to confirm or deny the report and said the company has no plans to issue a statement on Azadegan at this moment.

Shares of Inpex rose as much as 15,000 yen, or 1.7 percent, to 887,000 on the Tokyo Stock Exchange. They were at 883,000 yen, up 1.3 percent, at 1:19 p.m. local time.

Older Fields

Iran’s new oil discoveries are failing to keep pace with the depletion of its existing reserves. The country needs to add a much as 400,000 barrels of new daily oil output each year to keep production even, the state oil company said last year.

The country may ask Chinese or Russian companies to help develop the Azadegan field, which is expected to produce 260,000 barrels of oil a day. Officials from Iran and China on Sept. 12 said the countries had agreed to develop reserves in the Islamic Republic’s southwest.

Japan imports almost all its oil to fuel the world’s second- largest economy. Asia’s biggest oil importer got 13.8 percent of its oil from Iran in 2005.

U.S. Secretary of State Condoleezza Rice and diplomats from the other permanent members of the UN Security Council, plus Germany, will meet in London today to discuss Iran, State Department Spokesman Sean McCormack said yesterday. The British envoy to the UN said Britain may ask the council to take up Iran’s nuclear program next week.

Weapons Program?

The U.S. and European Union say Iran’s nuclear-power program is aimed at developing weapons, which would put the country in breach of treaty obligations and risk escalating tensions in the Middle East. The U.S. is pushing for economic sanctions to discourage Iran from acquiring nuclear arms.

Iran denies it’s trying to build an atomic bomb and says its program is intended to produce energy.

Russia, which has veto power as one of the five permanent members of the Security Council, yesterday reiterated its opposition to immediate sanctions.

Nicholas Burns, U.S. undersecretary of state for political affairs, told the Washington Times on Oct. 4 that the U.S. is confident Russia and China will join in pushing for sanctions.

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