OGJ Oil Diplomacy Editor
LOS ANGELES, Oct. 15 -- The US has welcomed the withdrawal of Inpex Corp. from Iran's Azadegan oil field project, saying that the Japanese firm’s decision underlines the risks of doing business with the Middle Eastern country.
“The United States welcomes the decision by the Japanese oil company Inpex to withdraw from its investments in Iran,” said US State Department spokesman Philip Crowley. “Inpex's decision today once again underscores that there are risks in dealing with Iran,” he said.
Earlier reports said Japan and Inpex planned to withdraw from the Azadegan project in an effort to avoid the possibility of violating US sanctions (OGJ Online, Sept. 30, 2010).
“After Japan imposed sanctions on Iran on Sept. 3, the government told us to deal with the project with great care,” said Inpex spokesman Kazuya Honda, adding that it is now “our policy to closely consult with the government over this project.”
Inpex this week confirmed that its decision to withdraw followed discussions with Tokyo. “After proper consultations with the Japanese government, we chose to withdraw," said an Inpex spokesman, adding, “We no longer own the 10% stake.”
Crowley said Inpex’s actions are part of a “strong and emerging consensus” of governments and private firms that has joined together to send “a powerful and united signal” that Iran should meet its international obligations and begin to engage seriously on its nuclear program.
Western nations, led by the US, believe that Iran wishes to develop a nuclear program in order to develop weapons. Iran denies the claim, saying that it needs nuclear power to offset its declining production of hydrocarbons.
Meanwhile, the International Energy Agency this week cast doubt on earlier claims by Iranian officials of the country’s self-sufficiency in the production of gasoline.
“Even assuming that self-sufficiency has been fully achieved, increasing gasoline output at the expense of other petrochemicals is arguably unsustainable," IEA said.
“A shortage of several key petrochemical products has emerged, thus merely shifting around—rather than solving—the problem of insufficient oil product supplies,” IEA said.
“More ominously, Iran is unlikely to be able to carry out the necessary refining investments that would address this issue in the medium term, given the constraints imposed by international sanctions,” IEA said.
IEA’s statement followed claims by Iran’s Oil Minister Masoud Mirkazemi who said that his country was no longer importing gasoline and was even exporting it at the moment.
Iran’s refining sector was put under US and European Union sanctions this summer but Iran has responded by increasing production capacity, including by a temporary conversion of petrochemicals plants into refineries.
Under the new US legislation, signed into law July 1 by President Barack Obama, penalties will be imposed on businesses that sell or provide refined petroleum products worth $1 million or more or $5 million or more over a 12-month period.
The strengthened US sanctions are clearly having an effect. In July, Iran's gasoline imports fell 50% in July as traders began to halt supplies. According to Energy Market Consultants Ltd., Iran received 60,000 b/d in July, compared to 120,000 b/d in May (OGJ Online, Aug. 23, 2010).
Contact Eric Watkins at email@example.com.