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Inpex to quit Iran project under US pressure

Tokyo, September 30, 2010

Inpex Corp, Japan's top oil explorer, is likely to withdraw from Iran's Azadegan oil field project, acceding to a request from the US due to Washington's sanctions on Tehran over its nuclear programme, Japanese media said.

Inpex and the Japanese government are likely to make the decision due to the likelihood that Inpex could otherwise be mentioned in a new list of Iran-related firms to be targeted for US sanctions, the Nikkei and Yomiuri newspapers said.

An Inpex spokesman said that the firm has not made any decision on withdrawing from the project, and that it would consult the Japanese government on the issue.

Kyodo news agency quoted Japan's trade minister Akihiro Ohata as saying that Inpex was considering pulling out. Inpex would have trouble raising funds from US financial institutions and its global development projects could be hindered if the company featured on the US list.

Azadegan was the Opec member's biggest oil find in 30 years when announced in 1999, with oil-in-place of 26 billion barrels and recoverable resources then estimated at about 6 billion barrels, and it is believed to cost at least $2 billion to develop.

The field started partial production in 2008 and currently produces about 45,000 barrels per day (bpd), Inpex said. Peak output is estimated at 260,000 bpd, but Inpex did not give a timing on when that level would be reached.   

Inpex said it has so far invested about 12.4 billion yen ($148 million) in Azadegan, in which it has a 10 percent stake.

Japan's government is the biggest shareholder in Inpex, with an 18.9 percent stake under the trade minister's name, even after a recent multibillion dollar share sale.   

The trade ministry was not immediately available for comment.   

Earlier this month, Japan imposed additional sanctions on Iran, following the United States and European Union in pressuring Tehran despite Tokyo's reliance on oil imports from the country.   

At that time, Japan's then trade minister, Masayuki Naoshima, said he did not expect any major change in Inpex's investment, currently Japan's sole energy-related stake in Iran.

When tension was growing in 2006 between the United States and Iran over the country's uranium processing and nuclear power development, Iran cut Inpex's stake in the Azadegan project to 10 percent from the 75 percent share agreed in February 2004. Iran holds the remaining 90 percent.   

Losing Azadegan would hurt the Japanese government's efforts to lift the share its companies produce overseas to the equivalent of 40 percent of the country's oil imports by 2030. - Reuters




Tags: Iran | Japan | Nuclear | Inpex | sanction | oil explorer |

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