March 23, 2006

US asks Japan to stop Iran oil development-paper

By Elaine Lies

TOKYO (Reuters) - The United States has informally asked
Japan to suspend its plans to develop an Iranian oil field as
part of world efforts to prevent Iran from obtaining nuclear
weapons, a Japanese newspaper said on Thursday.

Resource-poor Japan has been planning to develop Iran's
Azadegan oil field, estimated to hold the world's
second-biggest single oil reserve, despite objections from

But Japan's top government spokesman, Shinzo Abe, said
Tokyo's plans to develop Azadegan were not currently a topic of
discussion with the United States and added that the project
was vital for Japan's aim of securing stable energy supplies .

The report comes a week after Japan's largest refiner,
Nippon Oil Corp., said it would cut imports of Iranian crude
due to rising risks associated with the country, the first hint
that Tehran's nuclear dispute is affecting its vital oil trade.

According to U.S. government sources quoted by the daily
Sankei Shimbun, U.S. Deputy Secretary of State Robert Zoellick
and Undersecretary of State Robert Joseph informally asked
Japan to at least temporarily suspend its plans to develop

The request was based on the belief that developing the
field would provide income for Iran that could support its
nuclear activities, as well as make it hard for the
international community to present a united front in dealing
with Iran, the newspaper said.

It said there was a movement within the U.S. Congress to
make a similar request.

Asked about Azadegan, Japan's Abe said Tokyo would pay heed
both to nuclear non-proliferation and its own energy needs.

"It is not the case that the Japanese government is holding
concrete discussions at this juncture with the United States
regarding the future direction of the development of the
Azadegan oil field," said Abe, the chief cabinet secretary.

"We would like to deal with this firmly based upon our
basic recognition that both...the nuclear non-proliferation
issue and stable crude oil supplies are important," Abe told


Japan sealed a deal with Iran two years ago on a
billion-dollar project to develop Azadegan.

The Japanese government has a 36 percent stake in INPEX
Corp., Japan's biggest oil developer, which plans to develop
the southern part of Azadegan, estimated to hold 26 billion
barrels of oil.

An INPEX official said it has not been contacted by the
U.S. or Japanese governments regarding the Azadegan oilfield,
and officials at Japan's foreign and trade ministries declined
to comment.

The United Nations Security Council, which can impose
sanctions, has so far failed to reach accord on a statement
calling on Iran to suspend its uranium enrichment activities.

Both Russia and China have balked at approving a draft
statement, fearing that threats might escalate and prompt Iran
to cut off all contact with the U.N.'s nuclear watchdog agency.

Earlier this month, John Bolton, the U.S. ambassador to the
United Nations, urged Japan to work with Washington, saying
that he understood Japan's difficult energy situation but that
the global community had to work together to combat nuclear

Resource-poor Japan imported almost all of its crude oil
needs amounting to 4.2 million barrels per day (bpd) last year,
and about 90 percent of the volume was supplied by Middle
Eastern producers.

Iran is Japan's third-largest oil supplier, and Tokyo has
maintained healthy relations with Tehran even at the expense of
upsetting Washington.

But Nippon Oil said last week it would reduce its purchases
of Iranian crude by an average of 22,000 bpd to 120,000 bpd
this year in view of growing risks related to the country.

The cut represents 2 percent of its refining capacity.

The company will reduce Iranian crude imports via traders
but will not change the amount that it purchases through direct
long-term contracts with Iran.

A government council said on Wednesday that Japan should
more than double crude oil imports from its equity oilfields in
the next 25 years to improve energy security.

(Additional reporting by Ikuko Kao and Masayuki Kitano)