OIL - Japan closer to major deal with Iran

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Despite U.S. opposition, Japan moves closer to clinching major oil deal with Iran

By Afshin Valinejad, Associated Press, 7/8/2001 16:22

TEHRAN, Iran (AP) Japan moved closer to securing the right to develop Iran's largest oil field, shrugging off U.S. efforts to stop allies from making major energy deals with a nation it accuses of sponsoring terrorism.

Japan signed a letter of intent with Iran on Sunday in which it agreed to spend $10 million to help fund a seismic study of the Azadegan oil field, which contains an estimated 26 billion barrels of oil. The two countries also signed an energy cooperation agreement.

''Japan is not affected by U.S. pressure,'' Japanese Trade Minister Takeo Hiranuma told reporters during a signing ceremony in Tehran.

Iranian President Mohammad Khatami, who met with Hiranuma, said Iran looks forward to Japan's participation in oil and energy affairs with special emphasis on Azadegan.

The United States accuses Iran of sponsoring international terrorism and has strongly discouraged investment in its energy sector.

The Iran-Libya Sanctions Act, which took effect in 1996, bars American companies from investing more than $20 million in Iran's oil and gas industry and threatens to punish foreign companies that do so.

So far, Washington hasn't followed through on its threat.

While Japan's planned investment for the seismic study would not risk U.S. action, the nation would likely invest much more money if it ends up developing the Azadegan field.

Last November, Japan secured priority bidding rights to develop the field. Japan is dependent on foreign oil, and Iran is its third-largest oil supplier.

Iranian Oil Minister Bijan Namdar Zanganeh told reporters the letter of intent showed the U.S. sanctions ''have had no effect on the Iranian oil industry.''

The Japanese agreement is the second in two weeks by a U.S. ally disregarding U.S. opposition. Italy's ENI signed a $1 billion deal last week to develop Iran's Darkhovin onshore oil field.

-- Anonymous, July 08, 2001


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