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Japan's Iranian oil
dilemma
By Jamie Miyazaki
The
last time a senior Iranian delegation had breezed
through Tokyo, back in 2000, the Japanese felt rightly
smug at the results of their diplomatic efforts. A cool
US$3 billion credit line to the hard-up Islamic Republic
had secured Tokyo preferential rights to the massive
26-billion-barrel Azadegan oilfield. Coming hot on the
heels of Saudi Arabia's cancellation of Japan's oil
concession at Al Khafji, Azadegan represented a major
coup for Japan's Ministry of Economy, Trade and Industry
(METI), entrusted with the task of securing Japan's
energy security.
However, this was all before
September 11, 2001, and US President George W Bush's
later infamous "axis of evil" speech. Since then the
strategic landscape of energy politics and the Middle
East has changed beneath METI's feet. Recent revelations
of Iranian nuclear ambitions have strengthened the hand
of Washington's neo-cons in adopting a more antagonistic
approach to dealing with Tehran's mullahs. All this has
caught Tokyo on the back foot as it seeks to maintain a
workable strategic balance between its key ally, the
United States, and guaranteeing an uninterrupted supply
of oil.
Back in June 2001, Japanese trade
minister Takeo Hiranuma announced that "Japan is not
affected by US pressure" after signing a letter of
intent to develop the Azadegan oilfield. Since then, US
pressure has evidently risen a few notches. This summer
National Security Adviser Condoleezza Rice and Deputy
Secretary of State Richard Armitage summoned Ryozu Kato,
the Japanese ambassador to Washington, to make clear US
displeasure at an Azadegan deal as long as Iran was
pursuing a covert nuclear-weapons program. Expiration of
the June deadline formally to ink the deal to develop
Japan's Azadegan concession slipped by, to the
discomfort of both Tokyo and Tehran (see Americans stymie Japan-Iran oil
deal, July 4).
Washington meanwhile
demanded that Iran sign the International Atomic Energy
Agency's Additional Protocol allowing rigorous
inspection by IAEA officials, which put further pressure
on Tokyo. Iran responded by upping the ante with the
unconfirmed discovery of a 38-billion-barrel oilfield
and hinting that it would enter into talks with Chinese
and Russian consortia in Japan's place.
With
energy tussles with the Chinese already under way in
Siberia over Russian oil, alarm bells started ringing in
Tokyo as its attempts at separating the Azadegan and
nuclear issues looked set to implode. Iranian Foreign
Minister Kamal Kharrazi's visit to Japan last week was
thus a vital opportunity for Tokyo to find a way of
resolving the crisis.
Japanese efforts look to
have worked, for the moment at least. Kharrazi confirmed
Iranian willingness to sign the IAEA's Additional
Protocol and METI's new energy strategy with Azadegan at
its center has been vindicated. However, the crisis has
brought into focus again Japan's precarious energy
security.
Japan imports nearly 90 percent of its
oil from the Middle East. Iran was therefore always a
curious choice for a country looking to diversify its
heavy over-reliance of energy sources beyond the
mercurial Persian Gulf region. From the outset Japan's
Foreign Ministry was reticent about dealing with Iran.
Not only would a major deal complicate relations with
Washington, but memories of Japan's last disastrous
energy venture with Iran had yet to fade.
The
Bandar Abbas petrochemical complex of the late 1970s and
early 1980s ate up millions of dollars in financing and
was left hostage to the Iranian revolution and then the
Iran-Iraq war before finally being mothballed. With
security deteriorating in Iraq and Azadegan located just
10 kilometers from the Iraq border, many in the Foreign
Ministry are still feeling twitchy about the project.
For the bureaucrats at METI, though, Iran's lure
is too great to ignore. Japan has one of the lowest
energy self-sufficiency ratios among industrialized
nations and a confused energy-markets deregulation
policy looks set to push up what already are some of the
highest electricity costs in the world. Throw in a
scandal-plagued nuclear power system and no coherent
strategy for disposal of nuclear waste, and it is clear
that Japan needs to look at securing new energy
resources fast.
Azadegan is thought to hold the
world's largest undeveloped oil reserves, and Iran is
known to have the world's second-largest gas reserves. A
successful deal with Tehran now could pave the way for
gas contracts and provide a useful gateway into the
reserves of the Caspian Sea region - assuming the
serious issues of geopolitical instability are solved.
METI has also been betting on the Azadegan deal
as the vehicle to restructure the government-affiliated
Japan National Oil Corp (JNOC) into a new, more
streamlined oil-development company after its disbanding
at the end of the 2004 fiscal year. As one anonymous
METI official pointed out, "if the Azadegan project
comes to a halt, Japan will have to rethink its
strategy".
Whether the project comes to a halt
or not will be hammered out at bilateral US-Japan
working-level energy talks scheduled for this autumn.
Unfortunately Japan's policy of separating Iran's
nuclear-weapons program from its energy needs may well
turn out to be fatally flawed. Iran's Shahab-3 missile
is known to be based on North Korea's Nodong 1 missile
that threatens Japan.
Moreover, Iran probably
already has all the basic technology in place to make a
nuclear missile, giving it the luxury of being able to
sign the Additional Protocol with the option to withdraw
from the Non-Proliferation Treaty and go nuclear in a
very short time-frame should the situation require.
As fate would have it, Japanese Foreign Minister
Yoriko Kawaguchi was to meet in Europe on Wednesday with
IAEA director general Mohamed ElBaradei and attend a
Comprehensive Test Ban Treaty (CTBT) conference in
Vienna. Japan's antipathy to nuclear weapons, it seems,
can only be matched by its thirst for hydrocarbons.
(Copyright 2003 Asia Times Online Co, Ltd. All
rights reserved. Please contact content@atimes.com for
information on our sales and syndication policies.)
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