Japan FM to visit Tehran as Tokyo eyes investing in Iran's energy sector

By Milad Fashtami
Japanese government sources say the country’s Foreign Minister Fumio Kishida plans to visit Tehran in late October to discuss trade ties with Iranian officials.
The two countries plan to set up a joint committee to deal with energy and infrastructure development plans, as well as other economic issues.
Dalga Khatinoglu, an expert on Iran’s energy sector, told Press TV that Tokyo can play an important role in Iran’s energy sector once the US-engineered sanctions against the country are lifted.
“Iran’s both upstream and downstream projects are quite interesting for Japan,” he said.
“Iran needs $185 billion investment in upstream oil and gas projects in the next five years. The country also needs to invest $70 billion in its petrochemical projects. Japan has experience, investment might, and progressive technologies in both spheres,” he added.
Khatinoglu, who is the head of Iran news service at Trend News Agency, believes that despite the withdrawal of Japan’s INPEX from Iran’s Azadegan oil field project, Tehran can still count on Japanese companies.
“Inpex carried out the exploratory studies at Azadegan field in early 2000s and signed the deal in 2004, but finally abandoned the project in 2010 due to the sanctions. In the same time span, Mitsui Engineering & Shipbuilding Co. also signed an agreement with Iran to develop a $280 million project to construct a high-density polyethylene-petrochemical (HDPE) plant in Ilam province. The company, however, fulfilled its obligations and completed the project in 2010,” he said, adding that the plant is now producing 300,000 tons of HDPE annually.
Japan and Iran are also scheduled to begin three days of negotiations in Tehran in the coming week to conclude a bilateral investment treaty. The move aims at tapping into the commercial potential of the Iranian market for Japanese firms.
------ Win-win game for both sides
Japan has been planning to increase direct investment in Asia, especially central Asia and Middle East. Experts believe that the fast approaching removal of Iran’s sanctions is a golden opportunity for Japan to boost energy ties with the Islamic Republic.
Japan hopes to increase its oil imports from Iran. Tehran currently supplies only 5% of the East Asian nation’s total crude imports. The figure stood at 10% before the implementation of the US-engineered sanctions in 2011. Iran’s automobile industry is also promising for Japanese firms.
On the other hand, Iran also wants Japanese firms back in its energy projects.
Iran has several giant projects in the energy sector, so it needs the money of domestic and foreign investors to carry out the projects as soon as possible.
Oil Minister Bijan Namdar Zangeneh said earlier that Iran expects a bright future in cooperation with Japan in all areas.
Zanganeh made the remarks after a meeting with visiting Japan’s State Minister of Economy, Trade and Industry Daishiro Yamagiwa back in August.
The Iranian official also invited the Japanese firms to invest in Iran’s Liquefied Natural Gas (LNG) projects.
However, Tehran has several regional rivals in this regard.
Ilham Shaban, a senior energy expert at Natural Gas Europe, told Press TV that beside the United Arab Emirates and Saudi Arabia, Japan has been in talks with Azerbaijan and Turkmenistan, as well as other Central Asian states to increase its stake in their local energy projects.
Japan unveiled a plan in May to increase funding for Asian infrastructure projects. The country plans to contribute $100 billion over 5 years to the new Chinese-led Asian Infrastructure Investment Bank (AIIB).
Shaban says that Azerbaijan and Central Asian countries are keen to attract these new investment funds.
“For instance, Baku has been in talks with Japanese banks about an $8 billion loan to fund an Oil and Gas Processing and Petrochemical Complex (OGPC) project. The proposed project has a processing capacity of 12 billion cubic meters of gas. It is also capable of producing 800,000 metric tons of petrochemicals annually,” he said.
According to the expert, Turkmenistan and Japan are cooperating to realize a $10 billion energy-related investment package.
“Uzbekistan and Japan also signed several investment and loan agreements in addition to various technical assistance projects worth $3.8 billion in July,” he said, noting that Iran needs to make its investment opportunities more interesting for foreign investors to compete with its regional rivals. 

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