Japan wants oil left out of Iran sanctions

TOKYO, Aug 21: Japan will propose that oil from Iran be left out of initial economic sanctions the international community may impose on Tehran if the country refuses to suspend uranium enrichment, a Japanese daily reported today.

The Yomiuri Shimbun, quoting government sources, said the move would be seen as an attempt by Tokyo to safeguard energy ties with Iran - its fifth-largest oil supplier - in the event of sanctions.

A Japanese Foreign Ministry spokesman denied that Tokyo had decided on such a proposal.

He said Tokyo was not framing its policies on the assumption that Tehran would turn down a package of incentives offered by the United States, Russia, China, France, Britain and Germany, for Iran to suspend enrichment.

Resource-poor Japan has been in a tough spot in the diplomatic tussle over Iran's nuclear ambitions, stuck between a need to meet its energy requirements and a wish to stand behind the rest of the international community.

Iran said yesterday it would not suspend uranium enrichment, a process that has both military and civilian uses, defying a U.N. Security Council resolution demanding that it halt the nuclear activities by August 31 or face the threat of sanctions.

But Tehran said it would formally respond by tomorrow to the package of incentives.

Iran has insisted that its nuclear activities are aimed at meet its increasing electricity demand.

Japanese officials have said Tokyo would join any international sanctions imposed on Iran, adding that resolving the nuclear stand-off takes precedence over its energy needs.

However, the Yomiuri said Japan was expected to urge that sanctions against Iran be conducted incrementally, with oil trade excluded from the first stage, and that the punitive measures should be lifted immediately once Iran halts uranium enrichment.

Japan has rights to develop Iran's Azadegan field - tipped as one of the largest untapped oil reserves in the world - but negotiations have been deadlocked since the deal was signed in 2004, when the project was thought to require an investment of some 2 billion dollars.

Iran has said it would finalise the Azadegan deal by August 22 with Japan's INPEX Holdings, but Japan's biggest oil explorer - whose largest stakeholder is the government - said no date has been set.

Iran had long been Japan's third-largest supplier of oil, but Japanese refiners have cut down on Iranian oil following the nuclear stand-off with the West, and its standing fell to fifth place in June.

Reuters