Identifier
Created
Classification
Origin
09TOKYO2754
2009-12-02 08:09:00
CONFIDENTIAL
Embassy Tokyo
Cable title:
JAPAN RESPONSE TO IRAN SANCTIONS ACT: REPORTED
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C O N F I D E N T I A L TOKYO 002754
SIPDIS
STATE FOR EEB/ESC TOM HAMMANG, EEB/TFS CHRIS BACKEMEYER,
NEA/IR FOR RAJ V WADHWANI
E.O. 12958: DECL: 12/01/2019
TAGS: ECON ENRG EPET ETTC IR PREL JA
SUBJECT: JAPAN RESPONSE TO IRAN SANCTIONS ACT: REPORTED
INVESTMENT IN THE IRANIAN OIL AND GAS SECTOR
REF: STATE 121808
Classified By: Deputy Chief of Mission James P. Zumwalt for Reasons 1.4
(b),(d).
C O N F I D E N T I A L TOKYO 002754
SIPDIS
STATE FOR EEB/ESC TOM HAMMANG, EEB/TFS CHRIS BACKEMEYER,
NEA/IR FOR RAJ V WADHWANI
E.O. 12958: DECL: 12/01/2019
TAGS: ECON ENRG EPET ETTC IR PREL JA
SUBJECT: JAPAN RESPONSE TO IRAN SANCTIONS ACT: REPORTED
INVESTMENT IN THE IRANIAN OIL AND GAS SECTOR
REF: STATE 121808
Classified By: Deputy Chief of Mission James P. Zumwalt for Reasons 1.4
(b),(d).
1. (C) SUMMARY: Japanese government officials and INPEX
company representatives confirmed the company holds a 10
percent stake in Iran's South Azadegan oilfield. Officials
from both the Ministry of Economy, Trade and Industry (METI)
and INPEX said the firm has not made any investment in Iran's
hydrocarbons sector since INPEX reduced its stake in Azadegan
from 75 percent in 2006. An INPEX executive characterized
the firm's stake in Azadegan as intended to recover initial
investment expenditures, and added the company has written
off half of the investment in its internal accounting. The
INPEX official expressed doubt the field will materialize
into a consistent revenue stream, and said the company has no
plan to invest further. METI oil and gas sector officials
said they were not aware of any other investment by Japanese
firms in Iran's hydrocarbons sector. END SUMMARY.
2. (C) Per reftel instructions, econoff met with INPEX
Corporate Strategy and Planning Group Manager Hiroshi Ikeda
and Middle East Unit Senior Coordinator Akihito Fuse, and
with METI Trade Policy Bureau, Middle East Division Director
Kiyoshi Mori and Senior Deputy Director Hideaki Fujisawa.
Econoff also met with METI Agency for Natural Resources and
Energy (ANRE) Oil and Gas Division Director Hirohide Hirai.
3. (C) INPEX's Ikeda said the firm holds a 10 percent stake
in South Azadegan, which it reduced from 75 percent in
October 2006. INPEX initially entered a risk
services/buyback contract with the Naftiran Intertrade
Company (NICO),a subsidiary of the National Iran Oil
Corporation (NIOC),in 2004 to develop and operate the first
phase of the project. In 2006 the firm reduced its stake to
10 percent, an amount Ikeda said would enable INPEX to
recover its initial investment, and transferred the remainder
of its stake to NICO. (Note: Post understands a number of
factors contributed to INPEX's divestiture, including safety
concerns due to uncleared mine fields, disputes with NIOC
over the scale and timing of the project, political pressure
from the United States, and international concerns
surrounding Iran's nuclear program. End note.)
4. (C) Ikeda characterized INPEX's remaining 10 percent stake
as intended to maintain the firm's legal right to recover
costs incurred under the services contract. Ikeda said the
balance of its investment does not exceed $20 million, and
would amount to less than one percent of INPEX's $17 billion
balance sheet in 2008. Ikeda added the firm does not expect
development under NIOC to progress and has, in fact, written
off half of the investment in its internal accounting. Ikeda
added the company maintains a two-person office in Tehran,
the role of which is to monitor developments in the Iranian
oil sector.
5. (C) Ikeda said INPEX is aware from media reports that NICO
has concluded an agreement with the China National Petroleum
Corporation (CNPC) to further develop the Azadegan oilfield.
He said INPEX has not received official notification from
either NICO or CNPC to create a new joint operating agreement
specifying CNPC as a third partner. Ikeda said he expects
CNPC's development of the oilfield, if any, to proceed
slowly, citing difficulty financing the project or procuring
necessary equipment in the face of international sanctions.
6. (C) Ikeda confirmed INPEX's involvement in the Soroosh and
Norwruz project ended with the project's completion in 2005.
Ikeda reiterated the firm has no other investment in Iran and
has no plans to undertake any.
7. (C) METI Trade Policy Bureau's Mori was unaware of the
October 20 Congressional letter or A/S Feltman's commitment
to a preliminary review. However, Mori confirmed, to his
knowledge, no Japanese firm other than INPEX has current
investments in Iran's hydrocarbons sector.
8. (C) ANRE's Hirai expressed appreciation for post's
notification of the Congress's interest and the Department's
preliminary review and said he is also not aware of any
Japanese firms' participation in Iran's oil and gas sector
apart from INPEX's 10 percent stake in Azadegan. He added
that, in light of the current sanctions regime and political
risk of doing business in Iran, METI would likely be aware of
any investment. Hirai also said CNPC would likely face
difficulty sending funds or transporting equipment to Iran in
the face of international sanctions, and said INPEX has not
received a cash call as would be expected if investment were
proceeding.
ROOS
SIPDIS
STATE FOR EEB/ESC TOM HAMMANG, EEB/TFS CHRIS BACKEMEYER,
NEA/IR FOR RAJ V WADHWANI
E.O. 12958: DECL: 12/01/2019
TAGS: ECON ENRG EPET ETTC IR PREL JA
SUBJECT: JAPAN RESPONSE TO IRAN SANCTIONS ACT: REPORTED
INVESTMENT IN THE IRANIAN OIL AND GAS SECTOR
REF: STATE 121808
Classified By: Deputy Chief of Mission James P. Zumwalt for Reasons 1.4
(b),(d).
1. (C) SUMMARY: Japanese government officials and INPEX
company representatives confirmed the company holds a 10
percent stake in Iran's South Azadegan oilfield. Officials
from both the Ministry of Economy, Trade and Industry (METI)
and INPEX said the firm has not made any investment in Iran's
hydrocarbons sector since INPEX reduced its stake in Azadegan
from 75 percent in 2006. An INPEX executive characterized
the firm's stake in Azadegan as intended to recover initial
investment expenditures, and added the company has written
off half of the investment in its internal accounting. The
INPEX official expressed doubt the field will materialize
into a consistent revenue stream, and said the company has no
plan to invest further. METI oil and gas sector officials
said they were not aware of any other investment by Japanese
firms in Iran's hydrocarbons sector. END SUMMARY.
2. (C) Per reftel instructions, econoff met with INPEX
Corporate Strategy and Planning Group Manager Hiroshi Ikeda
and Middle East Unit Senior Coordinator Akihito Fuse, and
with METI Trade Policy Bureau, Middle East Division Director
Kiyoshi Mori and Senior Deputy Director Hideaki Fujisawa.
Econoff also met with METI Agency for Natural Resources and
Energy (ANRE) Oil and Gas Division Director Hirohide Hirai.
3. (C) INPEX's Ikeda said the firm holds a 10 percent stake
in South Azadegan, which it reduced from 75 percent in
October 2006. INPEX initially entered a risk
services/buyback contract with the Naftiran Intertrade
Company (NICO),a subsidiary of the National Iran Oil
Corporation (NIOC),in 2004 to develop and operate the first
phase of the project. In 2006 the firm reduced its stake to
10 percent, an amount Ikeda said would enable INPEX to
recover its initial investment, and transferred the remainder
of its stake to NICO. (Note: Post understands a number of
factors contributed to INPEX's divestiture, including safety
concerns due to uncleared mine fields, disputes with NIOC
over the scale and timing of the project, political pressure
from the United States, and international concerns
surrounding Iran's nuclear program. End note.)
4. (C) Ikeda characterized INPEX's remaining 10 percent stake
as intended to maintain the firm's legal right to recover
costs incurred under the services contract. Ikeda said the
balance of its investment does not exceed $20 million, and
would amount to less than one percent of INPEX's $17 billion
balance sheet in 2008. Ikeda added the firm does not expect
development under NIOC to progress and has, in fact, written
off half of the investment in its internal accounting. Ikeda
added the company maintains a two-person office in Tehran,
the role of which is to monitor developments in the Iranian
oil sector.
5. (C) Ikeda said INPEX is aware from media reports that NICO
has concluded an agreement with the China National Petroleum
Corporation (CNPC) to further develop the Azadegan oilfield.
He said INPEX has not received official notification from
either NICO or CNPC to create a new joint operating agreement
specifying CNPC as a third partner. Ikeda said he expects
CNPC's development of the oilfield, if any, to proceed
slowly, citing difficulty financing the project or procuring
necessary equipment in the face of international sanctions.
6. (C) Ikeda confirmed INPEX's involvement in the Soroosh and
Norwruz project ended with the project's completion in 2005.
Ikeda reiterated the firm has no other investment in Iran and
has no plans to undertake any.
7. (C) METI Trade Policy Bureau's Mori was unaware of the
October 20 Congressional letter or A/S Feltman's commitment
to a preliminary review. However, Mori confirmed, to his
knowledge, no Japanese firm other than INPEX has current
investments in Iran's hydrocarbons sector.
8. (C) ANRE's Hirai expressed appreciation for post's
notification of the Congress's interest and the Department's
preliminary review and said he is also not aware of any
Japanese firms' participation in Iran's oil and gas sector
apart from INPEX's 10 percent stake in Azadegan. He added
that, in light of the current sanctions regime and political
risk of doing business in Iran, METI would likely be aware of
any investment. Hirai also said CNPC would likely face
difficulty sending funds or transporting equipment to Iran in
the face of international sanctions, and said INPEX has not
received a cash call as would be expected if investment were
proceeding.
ROOS