Japan Inpex Reiterates Won't Pull Out From Iran Oil Project

TOKYO, Jun 07, 2006 (Dow Jones Commodities News Select via Comtex)

Japan's Inpex Holdings Inc. (1605.TO) Thursday reiterated that the government-backed company won't pull out from the massive Azadegan oil field project in Iran.

"There's no change in our plan to proceed with the Azadegan project," a company spokesman said, denying a report Wednesday that Inpex may be forced to exit the project because of a lack of progress.

"We are waiting for completion of de-mining by the Iranian side, which is now 90% done. We are now preparing to start (developing the oil field), " he said.

Iranian oil minister Kazem Vaziri-Hamaneh Wednesday ratcheted up the rhetoric on throwing Japanese contractors out the Azadegan oil project, repeating threats to bring in local contractors if delays continued.

"The Japanese delay developing the Azadegan oil field has been well beyond what we expected," he was quoted as saying by the official IRNA news agency.

In late May, a report by Kyodo News Service said the project could be terminated in September because Inpex hasn't embarked on any real work there. The report raised the prospect that Japan is delaying implementation due to U.S. opposition to the $2 billion oil deal. The Japanese government has a 36% stake in Inpex.

Inpex Corp., which merged with Teikoku Oil Co. to form Inpex Holdings April 2006, signed a contract on the oil development project in February 2004. Other signatories include National Iranian Oil Co. and its subsidiary Petroleum Engineering & Development Co.

The U.S. has opposed the Japan-Iran project in a bid to build up international pressure on Iran to abandon its nuclear ambitions.

Japanese refiners - major consumers of Iranian oil - have cut crude oil imports from the Middle Eastern country since March, including Nippon Oil Corp. (5001.TO), expressing concern that oil supplies from Iran might be disrupted.

Nippon Oil Corp. Chairman Fumiaki Watari said in March that his company plans to lower imports of oil from Iran this year by about 15% from 2005, partly because of the threat of economic sanctions over the country's nuclear enrichment program.

The oil field in Azadegan, southwestern Iran, is one of the most important projects for Inpex, with estimated 26 billion barrels worth of crude reserves. It may eventually produce more than 400,000 barrels a day.

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