Despite the collapse of key oil negotiations earlier this year, Japan and Saudi Arabia are entering the final stage of preparations for a 1.5 billion yen joint project to establish a training institute for Saudi car mechanics in the kingdom.

Government sources said Thursday that Japan will dispatch a government mission to Saudi Arabia next month to try to work out details of its technical cooperation for the project. The mission will consist of government officials and experts from the Japan International Cooperation Agency, a major government-affiliated aid organ, the sources said.

Saudi Arabia wants Japan to train Saudi Arabian faculty members in Japan, dispatch Japanese experts to Saudi Arabia and supply educational equipment and materials, the sources said.

Technical cooperation is one type of Japanese official development assistance that is usually extended in the form of either sending experts to developing countries or accepting trainees from them. The other two types of ODA extended to developing countries are low-interest yen loans and grants-in-aid.

When the two countries agreed nearly two years ago on the creation of a training institute for car mechanics, the project was still sketchy and lacked details.

According to the sources, however, Japan and Saudi Arabia have already reached a basic agreement on nontechnical cooperation for the project.

Under the agreement, the Saudi-Japanese Automobile High Institute will be built on a 70,000-sq.-meter site about 25 km east of Jeddah. Crown Prince Abdullah Bin Abdulaziz Al Saud will donate the land for the project.

The 1.53 billion yen cost of construction will be equally covered by the Japan Automobile Manufacturers Association and the Japan Automobile Distributors in Saudi Arabia, the sources said.

The institute is scheduled to open in September 2002. It will have 400 students -- 200 first graders and 200 second graders -- and more than 50 teachers.

Public-private sector joint committees have already been set up in both Japan and Saudi Arabia to support the project. The Japanese Supporting Committee consists of the foreign, trade and transport ministries, as well as JICA and JAMA.

The two countries agreed on the training institute as part of an action program to build a "comprehensive partnership for the 21st century" when Crown Prince Abdullah, King Fahd's brother, visited Tokyo in October 1998. Crown Prince Abdullah is expected to succeed the ailing king.

The Japan-Saudi Arabia Cooperation Agenda, as the action program is formally called, calls for bilateral cooperation in a wide range of areas, including education, health, the environment, science and technology, and culture.

The program, which was originally proposed by Tokyo, states that Japan "will promote cooperation aimed at achieving long-term goals, with a special focus placed on the development of human resources and investment in Saudi Arabia."

Japan hoped the action program would help create a favorable environment for tough negotiations on renewing Arabian Oil Co.'s oil-drilling rights in the Khafji oil field in the former neutral zone between Saudi Arabia and Kuwait.

In the early stage of hectic oil negotiations, Saudi Arabia demanded increased Japanese investment in the kingdom, especially in the automobile and other manufacturing sectors.

But the oil negotiations eventually collapsed at the end of February, after Japan rejected a Saudi demand to finance a $2 billion industrial railway project in the kingdom in return for the renewal of the drilling rights.

As a result, Arabian Oil, Japan's largest oil producer, lost the rights, which it had held for nearly four decades in the kingdom, and operations in the Saudi-controlled portion of the Khafji oil field were taken over by Riyadh.

Although relations between Tokyo and Riyadh were soured, Tokyo has tried to minimize the damage done to bilateral ties by not backing off from efforts to implement the mechanics training institute and other projects included in the 1998 action program.