U.S. asks Japan to stop Iran oil development

Elaine Lies, Reuters:

The United States has informally asked Japan to suspend its plans to develop an Iranian oil field as part of world efforts to prevent Iran from obtaining nuclear weapons, a Japanese newspaper said on Thursday.

Resource-poor Japan has been planning to develop Iran's Azadegan oil field, estimated to hold the world's second-biggest single oil reserves, despite objections from Washington. READ MORE

The report comes a week after Japan's largest refiner, Nippon Oil Corp., said it would cut its imports of Iranian crude due to rising risks associated with the country, the first hint that Tehran's nuclear dispute is affecting its vital oil trade.

According to U.S. government sources quoted by the daily Sankei Shimbun, U.S. Deputy Secretary of State Robert Zoellick and Undersecretary of State Robert Joseph have informally asked Japan to at least temporarily suspend its plans to develop Azadegan.

The request was based on the belief that developing the field would provide income for Iran that could support its nuclear activities, as well as make it hard for the international community to present a united front in dealing with Iran, the newspaper said.

It said there was a movement within the U.S. Congress to make a similar request.

Japan sealed a deal with Iran two years ago on a billion-dollar project to develop Azadegan.

The Japanese government has a 36 percent stake in INPEX Corp., Japan's biggest oil developer, which plans to develop the southern part of Azadegan, estimated to hold 26 billion barrels of oil.

An INPEX official said it has not been contacted by the U.S. or Japanese governments regarding the Azadegan oilfield.

"Our company has not heard from the U.S. or Japanese governments. And we have a policy not to comment on diplomatic matters," an INPEX spokesman said.

Officials at Japan's foreign and trade ministries declined to comment.

The United Nations Security Council, which can impose sanctions, has so far failed to reach accord on a statement calling on Iran to suspend its uranium enrichment activities.

Both Russia and China have balked at approving a draft statement, fearing that threats might escalate and prompt Iran to cut off all contact with the U.N.'s nuclear watchdog agency.

Earlier this month, John Bolton, the U.S. ambassador to the United Nations, urged Japan to work with Washington, saying he understood Japan's difficult energy situation but that the global community had to work together to combat nuclear proliferation.

Resource-poor Japan imported almost all of its crude oil needs amounting to 4.2 million barrels per day (bpd) last year, and about 90 percent of the volume was supplied by Middle Eastern producers.

Iran is Japan's third-largest oil supplier, and Tokyo has maintained healthy relations with Tehran even at the expense of upsetting Washington.

But Nippon Oil said last week it would cut its Iranian crude buying by an average of 22,000 bpd to 120,000 bpd this year, saying risks related to the nation were growing.

The cut represents 2 percent of its refining capacity.

The company will reduce Iranian crude imports via traders but will not change the amount that it purchases through direct long-term contracts with Iran.

A government council said on Wednesday that Japan should more than double crude oil imports from its equity oilfields in the next 25 years to improve energy security.