Japan's top oil developer Inpex Corp. has decided to withdraw from development projects in Iran's Azadegan oil field, and the firm has begun making final arrangements for the pullout with the Japanese government, according to government sources.
The move will mean the oil developer will not be listed as a company subject to U.S. sanctions over Iran's nuclear program. However, the sources insisted the decision was simply a business decision by Inpex. The government holds the largest share in the firm.
The withdrawal will press japan--which wants access to oil fields it has helped develop--to redefine its energy strategy and resource diplomacy in the Middle East.
Inclusion in the list of firms subject to the U.S. sanctions would prevent Inpex from doing business with U.S. financial agencies, meaning joint developments with U.S. firms would have to be called off. The sanctions would also negatively impact Inpex's development projects elsewhere in the world.
Inpex and the Economy, Trade and Industry Ministry have asked the U.S. government to remove Inpex from the sanction list. As Inpex will likely be taken off the list before it is announced Friday, the firm moved forward with its withdrawal from the Iran oil project.
The government sources said Wednesday that the withdrawal was decided because "iran is asking [Inpex] to invest more in the project, but [the Azadegan project] has several risks."
However, it is expected to take a significant amount of time for the government and Inpex to negotiate the withdrawal with iran.
The Azadegan oil field in southwestern Iran is said to have one of the world's largest oil reserves of 26 billion barrels.
A development contract signed in 2004 with the National Iranian Oil Company gave Inpex rights to a 75 percent stake in interests related to the oil field. However, the development project stalled because of issues surrounding Iran's nuclear program, and Inpex's stake in the project was reduced to 10 percent in 2006.