Japan and Saudi Arabia made little progress during negotiations held in Riyadh by the two governments earlier this week to renew oil-drilling rights for Tokyo-based Arabian Oil Co., trade chief Takashi Fukaya said Friday.
"To our regret, we saw no progress," Fukaya told a news conference Friday, referring to the two-day talks between Hisamitsu Arai, vice minister for international affairs, and Saudi officials, aimed at breaking the deadlock over concession rights in the Khafji oil field.
Arabian Oil Co., Japan's largest oil producer and strongly backed by the government, produces oil in the Khafji field, located in the former neutral zone between Saudi Arabia and Kuwait. The field accounts for 5 percent of Japan's crude oil imports.
Arai has delivered a letter from Fukaya to Saudi Arabia that includes Japan's final proposal for an investment package for the Middle Eastern country.
Fukaya added that Tokyo will await a "forward-looking response" from Riyadh, which has promised to reply sometime next month.
Fukaya said the letter conveyed "the most that Tokyo can concede" in the negotiations, while declining comment on further details.
With the current 40-year agreement giving Arabian Oil Co. exclusive rights to the oil concession due to expire in February, Tokyo has been waging frantic negotiations, offering a public investment package of 400 billion yen covering 10 years to facilitate Japanese investment in the Gulf region.
On the major sticking point -- a Saudi project topping $2 billion to build a 1,400-km mining railroad -- Fukaya said, "It is impossible for the (Japanese) private sector to undertake the project."
Saudi Arabia has proposed renewing the Khafji concession rights in exchange for Japan's undertaking the railway project.
Fukaya noted Tokyo is ready to provide the Saudis with financial and technological assistance to back the project.