• Kyodo

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Iranian Oil Minister Bijan Namdar Zanganeh has announced that Iran and Japan are close to clinching a $2.8 billion deal to develop the massive Azadegan oil field despite U.S. objections, Iran’s official news agency reported Monday.

“Despite American pressures, the Azadegan oil deal with Japan is nearing finalization,” he was quoted as saying by the Persian daily Khorassan, according to the Islamic Republic News Agency.

According to the IRNA report, the oil minister’s remarks have “dispelled speculation that Tokyo had bowed down to U.S. pressure and pulled out of the venture.”

Zanganeh said his ministry negotiated with Chinese, Indian and Russian consortiums, but “the chances of concluding a deal with Japan are high.”

Last week, the Iranian Foreign Ministry said that Iran reserved the right to enter into negotiations with oil companies from countries other than Japan over the development of the huge field, with a consortium made up of Japanese firms having failed to reach a deal with the Oil Ministry before an end-of-June deadline.

It added, however, that Japan had not been ruled out and that Japanese firms were still continuing negotiations with Oil Ministry officials to see if they could hammer out a deal.

A state-backed private consortium including Tomen Corp., Inpex Corp. and Japan Petroleum Exploration Co. has been negotiating with Iran over the development of the field for about two years.

Azadegan, located in southern Iran, is thought to hold the biggest undeveloped oil reserves in the world — an estimated 26 billion barrels of crude oil.

During President Mohammad Khatami’s visit to Japan in 2000, Tehran offered preferential rights to Japanese consortiums over the oil field’s development.

In return, Japan pledged to grant Iran a $3 billion credit line over three years, according to an IRNA report.

The U.S. opposes the deal due to concerns over Iran’s suspected development of nuclear weapons, its alleged support for Islamic extremists, its suspected harboring of key al-Qaeda members, and its relations with Shiite terrorist organizations in Iraq.

Japan is looking to ink a deal with Tehran over the development of the Azadegan oil field to diversify its petroleum sources, having lost concessions to the Saudi Arabia-controlled segment of the offshore Khafji oil field in the Persian Gulf in 2000.