Eric Watkins
Senior Correspondent
LOS ANGELES, Oct. 6 -– Japan's Inpex Corp. has agreed to reduce to 10% its concession in Iran's Azadegan oil field from the current 75%, with the outstanding 65% stake to be transferred to National Iranian Oil Co.
With the agreement, Japan will likely avoid withdrawing from the development project altogether. But the Japanese government will suspend planned financial assistance to the development project.
As a result, Iran, which is cash-strapped and has little technological expertise, is thought likely to attempt to transfer most of its concession to a third party.
NIOC Managing Director Gholamhosein Nozari has already suggested that Iran could transfer the 65% share to other companies, either Iranian or foreign. France's Total SA is considered one possibility, along with other unnamed Russian and Chinese firms.
Due to the threat of United Nations economic sanctions, however, it is uncertain whether NIOC will be able to find a new participating company among any international firms for the project.
Inpex, owned 29.35% by the Japanese government, signed a contract with NIOC in February 2004 to develop Azadegan. But development work for the field was delayed by the possibility of UN sanctions being imposed on Iran due to its nuclear program.
Also Inpex reportedly is requesting from NIOC a proportionate reimbursement of the substantial advance fee it paid for the development rights.
Azadegan, in southwestern Iran, was one of Iran's biggest oil finds when announced in 1999, with oil in place of 26 billion bbl and reserves pegged at 6 billion bbl.
The field is eventually expected to produce 260,000 b/d of crude oil, equivalent to 6% of Japan's total crude imports.
Contact Eric Watkins at [email protected].
