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Japan, Iran sign major oil deal, US
dismayed
By Richard
Hanson
TOKYO - Despite a US warning against doing
business with Iran, a Japanese consortium has signed a
US$2 billion deal to develop a major Iranian oilfield on
the Iraq border, one of the world's largest, with
estimated reserves of 35 billion barrels. Japan expects
to pump 300,000 barrels a day by 2006.
The
United States rebuked Japan, citing problems with Iran's
nuclear program, and tried to block the deal so crucial
to Japan's energy security.
This is about oil,
not friendship, and the story goes back 30 years.
During the first "oil crisis" of 1974, a senior
executive of Mitsui & Co visited Iran and saw tons
of gas burning off over an Iranian oilfield. "We could
use that," he observed. The result was what became a
disastrous, and expensive, petrochemical project named
Bandar Shapur, or Port Shah. The unfinished project was
badly damaged in the 1979 Islamic revolution. Renamed
Bandar Khomeini, it was left to rust. Chalk it off to an
early, somewhat naive, attempt to secure oil supplies in
an unstable region.
On Wednesday, another
Japanese consortium, after lengthy talks, signed a basic
agreement on a very large oil-development project in
Azadegan, one of the world's largest oilfields recently
found, close to the border with Iraq. It marks the
apparent success of a long campaign to secure oil
supplies in an unstable region.
Japan is still
dependent on imports for virtually all of its oil. And
in recent years, oil sales and other ties with Iran have
grown stronger and more extensive.
This time,
Japan is doing business with Iran despite a sharp rebuke
by the United States, its ally in rebuilding war-torn
Iraq, where Japan has sent a substantial humanitarian
aid contingent. The US severed diplomatic relations with
Iran after the fall of the Shah, and a bitter hostage
standoff, and President George W Bush named Iran one of
the three "axis of evil" nations, suspected of working
on a nuclear bomb. Iraq and North Korea are the other
two axis members.
Oil from the new Azadegan
Field could be up and pumping some 300,000 barrels a day
by 2006 and supplying as much as 6 percent of Japan's
needs. On the Japanese side, the Japan Petroleum
Exploration Co, Inpex Corp and Tomen Corp are
participating.
On the Iranian side, Tehran's
deputy oil minister, Mehdi Mirmoezi, signed the contract
at a ceremony. Inpex president Kunihiko Matsuo
represented Japan.
Under the agreement, European
oil companies may be able to participate in Azadegan,
with estimated reserves of up to 35 billion barrels.
It took four years to negotiate the deal, valued
at about US$2 billion, which was largely inspired by the
failure of Japan's Arabian Oil Co to renew its rights to
drill in the Saudi Arabian portion of the Khafji field
in 2000 - leaving Japan with no drilling rights in the
area.
Iran's efforts to attract investment have
been hampered by internal problems and by the US efforts
to block the deal.
After the agreement was
signed, Japan's Ministry of Foreign Affairs said it
hoped that "the signing of this contract will further
promote cordial Japan-Iran relations". At the same time,
Prime Minister Junichiro Koizumi has said that "Japan
shares a concern about nuclear proliferation with the
International Atomic Energy Agency" (IAEA) and wants
Iran to "faithfully comply" with resolutions that urge
Iran to cooperate in inspections (for nuclear-weapons
programs).
How seriously does the US take this
deal? Under Secretary of State John Bolton put a
reasonable spin on it in one press interview: "I think
the Azadegan arrangement has just been proceeding on a
completely separate track and the government of Japan
has made it very clear that they remain very concerned
about Iran's proliferation activities and very concerned
that Iran be held strictly accountable" under the
nuclear Non-Proliferation Treaty and resolutions of the
IAEA.
"I don't think that there is any
difference in the view in the government of Japan and
the United States on this point," he told news agencies.
But then again, the US and Japan are also trying
to demonstrate a united front in forthcoming talks with
North Korea, which is rattling its own nuclear-secrets
sabers. In what is called the Six Nations meeting to be
held in Beijing next Wednesday, they will meet with
officials from China, Russia and North and South Korea.
This is no time to show disunity.
It is also no
time to ignore the fact that the US and Japan are at
odds over what one scholar once described as "a budding
Iranian enchantment with lasting consequences",
especially when Iran's relations with the US and
European powers have been strained. Princeton University
Professor Kent E Calder has pointed out that Iran's
underlying attraction for Japan has always been its
strategic location in the Persian Gulf, from which Japan
gets so much of its oil.
Other relations with
Iran also have also been strengthened. About 7,000
Iranians are living in Japan, partly because of a loose
visa policy, since tightened in 2000. This is far more
than any other immigrant population from any other
country in the Middle East. Former prime minister
Ryutaro Hashimoto has come as close as any Japanese
leader in trying to define Japan's relations with the
Caspian Sea region in general, with a presentation in
1997 dubbed his "Silk Road Speech".
"Whatever
the contours of Japan's coming involvement with Central
Asia, it will be profoundly linked to the critical
reality of Iran," he also said in a paper called
"Japan's Energy Angst and the Caspian Great Game".
Prime Minister Koizumi realized that the US
would be disappointed with the agreement, especially
because of the Iran's nuclear issues. But he didn't give
ground. "It is not only the United States but Japan that
is concerned about nuclear proliferation," he said
recently, observing that Japan is the only country to be
struck by atomic bombs. He also said Japan believes that
"Iran has been dealing with [the nuclear issue] fully
taking into consideration the relationships with he
IAEA".
Japan's chief Cabinet Secretary Yasuo
Fukuda said earlier, "Our country will deal with the
[Iran-related] issue in a cautious manner, given there
are problems which the US is concerned about."
Japan does not want another Port Shah.
(Copyright 2004 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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