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Author Topic:   Japan METI minister set for oil diplomacy tour
Ardalan
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posted June 30, 2001 14:21     Click Here to See the Profile for Ardalan     Edit/Delete Message   Reply w/Quote
By Miho Yoshikawa

TOKYO, June 29 (Reuters) - Japan's trade minister leaves next week for a four-nation Middle Eastern tour including Iran, where energy-hungry Japan hopes to win rights to develop the Azadegan oil field possibly with Royal Dutch/Shell.

In his weeklong visit starting on July 3, Takeo Hiranuma will travel to the United Arab Emirates, Saudi Arabia, Iran and Kuwait, the top four crude suppliers to Japan, which imports virtually all its crude. Hiranuma's visit to Iran will draw particular interest as it virtually coincides with a Japanese consortium's presentation to that country on Saturday of a development plan for the giant Azadegan field that seems likely to involve Royal Dutch/Shell.

The Japanese government -- while reticent about disclosing details of the plan which it says is being led by private firms -- makes clear that Hiranuma's visit will be aimed at promoting Japan's interest in securing a stable supply of crude oil from the Middle East, the source of over 85 percent of Japan's oil.

Just the four countries together account for 65 percent or more of Japan's crude imports.

An official at the Ministry of Economy, Trade and Industry (METI) said a primary purpose of Hiranuma's visit will be to back the consortium's bid to win the development rights in Azadegan, the world's biggest undeveloped oil field.

"On a government level, we are supporting talks between the Japanese consortium and Iran," the official said.

The consortium is comprised of development firms Indonesian Petroleum Ltd and Japan Petroleum Exploration Co, as well as trading company Tomen Corp and state-run Japan National Oil Corp.

Anglo-Dutch oil giant Shell, which has been widely reported as likely to join the consortium, said earlier this month that it was in talks with the Japanese firms but declined to say whether an agreement had been reached.

Sources in Tehran told Reuters this week that they saw no obstacles to the participation of Shell, which has already secured a deal to develop Iran's Soroosh/Nowrooz oil fields.

A partnership with Shell, with its long tradition in upstream development, would complement the Japanese consortium's lack of experience in that area.

MINOR PLAYER IN OIL DEVELOPMENT

Japan has had limited success in oil field development.

Moreover, Arabian Oil Co Ltd -- Japan's most successful oil development project to date -- lost half its business last year when it failed to renew drilling rights with Saudi Arabia on the kingdom's side of the Neutral Zone shared with Kuwait.

It has now started talks with Kuwait for the remaining half of the oil concession in the Neutral Zone, which must be completed before January 2003 when the current contract expires.

The loss of half that oil concession makes Japan doubly anxious for success in Iran.

Azadegan could become Japan's largest oil development if the consortium wins the rights to develop the field, which has the potential to pump up to 400,000 barrels per day (bpd).

Officials in the consortium declined to give details of the development plan, but the investment in the oil field is expected to amount to one trillion yen ($8.01 billion).

The METI official said he believes it would take about 10 years for commercial production to start.

Hiranuma will hold talks with oil ministers of three of the four countries as well as other senior officials, and he has asked for a meeting with Iranian President Mohammad Khatami.

Iran gave Japanese firms priority negotiation rights on Azadegan in November last year.

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