Iran Parliament Hopes Inpex Opts Out of Azadegan

Dow Jones Newswires

VIENNA Sep 11, 2006 (Dow Jones Newswires)

The chairman of the Iranian Parliament's energy commission said Monday that lawmakers hoped Japan's Inpex Holdings Inc. (1605.TO) would withdraw from developing the Islamic republic's giant Azadegan oil field, adding the company has until the end of this month to decide on its future involvement in the project.

Kamal Daneshyar, who heads the commission, told Dow Jones Newswires in an interview Monday: "The Azadegan project hasn't yet been finalized with the Japanese and the view of Iran's parliament is that we hope that Japan will decline in finally getting involved".

He added: "Azadegan involves the drilling of 100 wells and one production unit. It is easy for Iranian experts to do this. Iran was happy to do a favor for the Japanese but if they decline, Iran will be very happy to complete this project" alone.

Daneshyar was speaking on the sidelines of an Organization of Petroleum Exporting Countries meeting in Vienna.

Inpex, Japan's largest oil and gas exploration company, has a 75% stake in the $2 billion development project, estimated to contain 26 billion barrels of oil reserves.

State-owned National Iranian Oil Co. (NIO.YY) holds the remaining 25% stake.

An Iranian oil official recently told Dow Jones Newswires that the Japanese and the NIOC had agreed on increasing investment in the project to $1.943 billion from $1.026 billion.

He also said that France's Total SA (TOT) "is joining the process with anywhere from a 12% to 15% stake in the project."

The Japanese government has a 30% stake in Inpex and it is two years since the leaders of Iran and Japan signed a memorandum of understanding to develop Azadegan.

Daneshyar said by the end of "September an agreement is needed and if they want to be involved they can come up with the financing."

He added: "It seems...Japan has to get a positive instruction by the U.S. (President George W. Bush) administration before they can do anything.

"They have to ask the king and clearly Bush considers himself the king of the world."

Japan is under pressure to side with the U.S. in a bid to halt Iran's uranium enrichment activities, through sanctions if warranted.

Inpex has said it won't pull out of Azadegan, pinning the delay on the Iranians who it says haven't finished clearing it of land mines.

Azadegan in southeastern Iran near the border with Iraq is a crucial field to develop, as it is expected to pump 150,000 barrels a day by mid-2008 and reach 260,000 b/d by early 2012.

Japan plans to import two-thirds of the output, which could provide as much as 10% of Japanese total crude imports.

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