By Tetsuo Shintomi, KYODO NEWS - Aug 16, 2017 - 21:01 | World, All

Japan's Inpex Corp. is mulling participation in a tender for the development of the Azadegan oil field in southwestern Iran and formation of consortium with other foreign oil firms to that end, according to a high-ranking Iranian official.

If Inpex gets involved in the Azadegan again -- having given up its stake in the oilfield development project in 2010 to avoid being included on a list of companies subject to U.S. sanctions against Iran over its nuclear program -- it would be symbolic achievement for Japan, which is trying to resume investment in Iran.

"Inpex replied to our invitation letter for international bid, then told us they liked to be our partner in developing Azadegan," Ali Kardor, managing director of National Iranian Oil Co. and also deputy oil minister of Iran, told Kyodo News in a recent interview.

"We had meetings with executives from Inpex many times. They asked us how they could find a foreign operator, so we advised them to negotiate with major European companies with high technology," Kardor said.

"Azadegan is huge oil field. We certainly need new technology introduced by foreign firms. Forming a consortium would be better for both sides," he added.

Inpex, Japan's largest oil and gas exploration and production company, signed a memorandum of understanding to conduct studies for Azadegan in June 2016.

In a telephone interview with Kyodo News, a spokesperson for Inpex confirmed receipt of the invitation letter from NIOC and said, "It is true that we are mulling how we should deal with Azadegan, though we cannot announce details."

"A final decision will be made after we finish evaluating the condition of the international bid, and also the international situation."

Iran sealed a historic nuclear deal with world powers in July 2015, after which nuclear-related international sanctions were lifted in January 2016. Since then, foreign firms have been focusing more and more on the Iranian market.

Moreover, President Hassan Rouhani, a moderate who called for dialogue with the world community and seeks more foreign investment -- began his second four-year term earlier this month.

On the other hand, foreign companies regard the administration of U.S. President Donald Trump as a potential risk. He has repeatedly vowed to dismantle or renegotiate the nuclear deal, while his government has toughened sanctions related to Iran's missile program.

For Inpex, forming an international consortium is a good option to hedge this political impasse.

According to Kardor, the NIOC will soon provide all necessary data about the Azadegan oil field to interested foreign firms.

It will take about six months to gather technical and financial proposals from all applicants and evaluate them, and the contractor will be finalized by early next year, he said.

Kardor said the number of foreign firms participating in the Azadegan tender will exceed 10.

In addition to Inpex, Total S.A., Royal Dutch Shell plc, Petroliam Nasional Bhd (Petronas) and China National Petroleum Corp., which have already signed MOUs with NIOC, several other oil giants including Eni and BP have expressed pressing their intent to participate in the tender.

Kardor also expressed his high expectation for Tokyo-based Inpex, in which the Japanese government is the largest shareholder with an 18.9 percent stake.

"We know Japan seriously needs crude oil and gas, especially after the Fukushima nuclear disaster. We would like to establish long-term cooperation with Japan," he said.

Azadegan is one of the largest oil fields in Middle East, with an approximately 26-billion-barrel deposit of crude oil.

In 2004, the predecessor of Inpex Corp. acquired a 75 percent stake in the Azadegan field, but that was subsequently reduced to 10 percent.

Despite having invested some 12.5 billion yen in the project without any oil being produced, Inpex announced in October 2010 its withdrawal from the project amid toughened U.S. sanctions, saying it was afraid of adverse impacts, such as being shut out of access to U.S. financial institutions.