TEHRAN, Feb 19 (AFP) - Iran is hoping major investments from Japan in its oil and gas industries will emerge from a visit to Tokyo by its oil minister.
Iranian Oil Minister Bijan Namdar-Zangheneh kicked off a visit to Japan Monday where he is due to study "ways for greater oil cooperation" between Japan and Iran, according to the oil ministry here.
Iran is seeking to spread its sources of investment in its oil and gas industry, which have so far been mainly western, and European in particular, by attracting Asian nations led by Japan to play a more active role in its oil projects.
Iranian President Mohammad Khatami made this clear during his historic trip to Japan at the beginning of November, when he pleased his hosts by offering preferential rights in developing the enormous Azadegan oilfield in south-west Iran, which has reserves of 26 billion barrels.
Japan is the main economic partner in Asia for Iran, which is the second largest oil producer in the Organisation of Petroleum Exporting Countries (OPEC(.
Japan's mass circulation daily Yomiuri Shimbun had said in October that an agreement in principle had already been reached between Tokyo and Tehran, allowing for the Japanese government and a consortium of private companies to develop the Azadegan field.
The field can deliver 300,000 to 400,000 barrels per day (bpd), which is more than double the amount sent each day to Japan by Arabian Oil, the biggest Japanese oil production company.
The Azadegan project will allow Japan to count on a sure source of supply. In February 2000, Arabian Oil lost its exploration rights to a large Saudi field after a month of negotiations with Riyadh.
An agreement on exclusive negotiating rights was duly signed during Khatami's November visit to Tokyo, and Zangheneh's latest trip comes in the wake of the Iranian parliament agreeing in January to authorise foreign investments in the Azadegan reserves.
The parliament has also authorised the oil minister to sign a "buy back contract" worth 2.8 billion dollars, which allows a foreign partner to be paid through oil sales for the development of the Azedegan fields.
In return for the preferential rights given to Japanese firms, Tokyo is expected to give Tehran a three billion dollar line of credit.
Japan has a major involvement in Iran's electronic, hydro-electric and automobile industries, and is a major consumer of Iranian crude, but with so far hardly any involvement in oil and gas projects in Iran.
As well as seeking investments, Iran also wants to benefit from modern technological expertise to overhaul its oil industry, most of which dates back to the 1950's and '60's.
Iran must increase its production capacity to five million barrels per day in the next few years, which explains why it is looking not only for foreign investment, but also for more modern technology.