Iran's nuclear power program delays field development deal with Japan

The Japanese government, taking heed of US concerns about nuclear proliferation, has announced it will delay an agreement to help Iran develop Azadegan oil field, thought to contain estimated reserves of 24-40 billion bbl of oil.

July 1, 2003

3 min read

Eric Watkins
Middle East Correspondent

NICOSIA, July 1 -- The Japanese government, taking heed of US concerns about nuclear proliferation, has announced it will delay an agreement to help Iran develop Azadegan oil field, thought to contain estimated reserves of 24-40 billion bbl of oil.

"Suspicion about Iran's nuclear development is not an issue affecting only our country," Yasuo Fukuda, Japan's chief cabinet secretary, told reporters in Tokyo. "We can't sign the crude oil accord ignoring it."

The US said Monday it opposed Japanese investment in Azadegan field because Iran's nuclear power program might be a disguise to develop weapons.

"This would be a particularly unfortunate time to go forward with major new oil and gas deals" in Iran, US Department of State spokesman Richard Boucher said in a statement on the department's web site, responding to a question whether the US asked Japan not to conclude the Azadegan field agreement.

The US is opposed to such investments in Iran "at any time," Boucher said, but especially now "given recent revelations about Iran's nuclear programs and efforts being made through the International Atomic Energy Agency (IAEA) to deal with the threat Iran poses."

IAEA report
Mohamed El Baradei, the head of IAEA, issued a report in June accusing Iran of violating the nuclear nonproliferation treaty, and will visit the Middle Eastern country on July 9 as a follow-up to his report.

El Baradei's report said that research and development work for Iran's uranium enrichment gas centrifuge program took place at a previously undisclosed facility in Tehran called Kalaye Electric.

Iran is also reported to have used 1.9 kg of uranium hexafluoride (UF6) gas, previously imported from China, to test four centrifuges at Kalaye Electric in preparation for starting up a larger centrifuge pilot plant at Natanz.

The UF6 is part of a larger consignment Iran confirmed it had imported from China in 1991 and had not previously informed the IAEA about. That material, which includes 1,000 kg of UF6, is "now being stored at the previously undeclared Jabr Ibn Hayan Multipurpose Laboratories" located at the Tehran Nuclear Research Center, the IAEA report said.

The IAEA expressed its concern, saying that that "the role of uranium metal in Iran's declared nuclear fuel cycle still needs to be fully understood since neither its light-water reactor nor its planned heavy-water reactors require uranium fuel."

In Vienna, IAEA spokesman Mark Gwozdecky confirmed the timing of El Baradei's visit, saying he would "discuss all outstanding issues, particularly those identified in his recent report."

Japan's state-controlled Inpex Corp., Japan Petroleum Exploration Co., and publicly traded trading company Tomen are reported to be negotiating with Iran to invest 300 billion yen to produce 300,000 b/d of oil from Azadegan field over a 20-year period.

The three firms sent officials to Tehran over the weekend to conclude the agreement, but the firms risk violating the Iran-Libya Sanctions Act, originally passed in 1996 and updated in 2001, that provides for sanctions against investors of $40 million or more in Iran's oil and gas industry.