Iran, Japan await approval for Azadegan oil deal

TEHRAN, Sept 2 (Reuters) Iran and Japan's INPEX have reached an understanding over a project to develop the giant Iranian Azadegan oilfield but any deal still needs approval, a senior Iranian oil official said on Saturday.

Resource-poor Japan has rights to Azadegan -- tipped as one of the largest untapped oil reserves in the world -- but talks have stalled since the deal was signed in 2004, when the project was thought to require an investment of TEHRAN, Sept 2 (Reuters) Iran and Japan's INPEX have reached an understanding over a project to develop the giant Iranian Azadegan oilfield but any deal still needs approval, a senior Iranian oil official said on Saturday.

Resource-poor Japan has rights to Azadegan -- tipped as one of the largest untapped oil reserves in the world -- but talks have stalled since the deal was signed in 2004, when the project was thought to require an investment of $2 billion.

Last month, an Iranian official said INPEX Holdings Inc.

had until Sept. 15 to finalise the deal or Russian, Chinese and Iranian firms could be offered it. Deadlines have been missed in the past.

''An understanding has been reached and we can almost say that no dispute has remained on pricing,'' Iran's OPEC governor Hossein Kazempour Ardebili told reporters.

''Now we are at a stage that officials from both countries should approve it based on the new understanding. I think, by a maximum of two weeks, the parties will have the final agreement,'' he said.

It was not immediately clear whose approval was being sought.

When asked if Iran was considering involving Chinese and Russian firms in the project instead of Japan, he said: ''No, not at all.'' He did not give details of the deal reached. But the protracted talks have previously faltered over how to value the deal, including over the price of steel which would be used in the project and the extent to which the borderland field has been safely cleared of mines from the 1980-1988 Iran-Iraq War.

A contract to develop the southwestern field could put INPEX, in which the Japanese government is a major stakeholder, in the firing line of the United States, which is threatening sanctions on firms investing in Iran's energy sector.

Japan has expressed caution about including oil in economic sanctions that the international community could impose on Iran after Tehran failed to meet U.N. demands to halt sensitive atomic work by Aug. 31. Iran is Japan's fifth-largest oil supplier.

REUTERS PKS DS1450 billion.

Last month, an Iranian official said INPEX Holdings Inc.

had until Sept. 15 to finalise the deal or Russian, Chinese and Iranian firms could be offered it. Deadlines have been missed in the past.

''An understanding has been reached and we can almost say that no dispute has remained on pricing,'' Iran's OPEC governor Hossein Kazempour Ardebili told reporters.

''Now we are at a stage that officials from both countries should approve it based on the new understanding. I think, by a maximum of two weeks, the parties will have the final agreement,'' he said.

It was not immediately clear whose approval was being sought.

When asked if Iran was considering involving Chinese and Russian firms in the project instead of Japan, he said: ''No, not at all.'' He did not give details of the deal reached. But the protracted talks have previously faltered over how to value the deal, including over the price of steel which would be used in the project and the extent to which the borderland field has been safely cleared of mines from the 1980-1988 Iran-Iraq War.

A contract to develop the southwestern field could put INPEX, in which the Japanese government is a major stakeholder, in the firing line of the United States, which is threatening sanctions on firms investing in Iran's energy sector.

Japan has expressed caution about including oil in economic sanctions that the international community could impose on Iran after Tehran failed to meet U.N. demands to halt sensitive atomic work by Aug. 31. Iran is Japan's fifth-largest oil supplier.

REUTERS PKS DS1450