Japan, Iran sign US$2 billion deal to develop huge oilfield

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Last updated at: (Beijing Time) Thursday, February 19, 2004

Japan, Iran sign US$2 billion deal to develop huge oilfield

Japan and Iran have signed a 2 billion US dollars deal to jointly develop the massive Azadegan oilfield in southwestern Iran, according to Japanese official sources Thursday.

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Japan and Iran have signed a 2 billion US dollars deal to jointly develop the massive Azadegan oilfield in southwestern Iran, according to Japanese official sources Thursday.

An announcement of the agreement is expected to be made Friday.

The agreement will grant the Japanese consortium rights to development of the oil field in southwestern Iran, close to the border with Iraq.

he two sides will sign a formal contract after deciding details such as ratios of investment and the duration of the development, the sources said.

Actual production is expected to begin in 2006 with an estimated maximum output of more than 400,000 barrels per day.

The Azadegan oil field is believed to have crude oil reserves of 26 billion barrels. The agreement will give Japan the largest oil field it has ever developed independently.

The government-backed Japanese consortium involving Tomen Corp.,Inpex Corp. and Japan Petroleum Exploration Co. started negotiation with the Iranian government in 2000.

But the talks had been stalled due largely to pressure from theUnited States which has urged Japan to withdraw from the project due to its concern about Iran's alleged nuclear program.

Japan lost its preferential negotiation rights in June last year, and Iran apparently considered an international auction at one point.

But after Iran said recently it would accept inspections by the International Atomic Energy Agency and the United States softened its stance, Japan decided to push for the project.

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