(Reuters)- Japan's deal to develop the Azadegan oilfield in Iran, one of the world's biggest untapped reserves, appeared to hang by a thread on Thursday, as Japanese officials denied a report from Tehran that it had lost the project by failing to begin development quickly enough.
Japan's INPEX Holdings Inc. (1605.T: Quote, NEWS, Research) has not yet been excluded from a project to develop Iran's giant Azadegan oilfield, and talks on the project were continuing on Thursday, Takao Kitabata, vice minister at the Ministry of Economy, Trade and Industry, told a news conference on Thursday, reports Trend.
"The project is ongoing and negotiations will take place today," he said.
But he said he did know know how long the talks would last.
His comment was made in response to a media report from Tehran that said the Japanese company had lost the right to take part in the project.
Iran's Fars news agency on Wednesday quoted Gholamhossein Nozari, the managing director of the National Iranian Oil Co. (NIOC), as saying the Japanese company had lost the rights to the field after last-ditch talks failed to reach a deal.
Asked why Iran reported the Iranian official's comment, Japan's Kitabata said this was an Iranian negotiating tactic INPEX spokesman Shuhei Miyamoto said the company did not think it had been excluded from the talks.
If it were aware that it had been excluded, INPEX would promptly disclose such an important business development, as required, he said.
Shares in INPEX closed down 0.1 percent at 872,000 yen, trimming earlier losses.
Japan's government is a major shareholder in INPEX.
Iran said on Monday that Japan had one or two days to commit to the project. Resource-poor Japan has the rights to Azadegan but talks have stalled since the deal was signed in 2004, when the project was thought to require an investment of $2 billion.
The talks have faltered over how to value the deal, including the price of steel to be used in the project and the extent to which the borderland field had been safely cleared of mines from the 1980-1988 Iran-Iraq War.
The field is believed to be one of the largest untapped oil reserves in the world.
"Talks continued today with the Japanese side. Various options were discussed. But the final talks did not reach a result," Iran's Nozari was quoted as saying on Wednesday, without giving a reason. "Having a tender or giving the work to Iranian companies are the options that we are pursuing."
Iran has previously threatened to start developing the Azadegan field on its own or to offer the project to Russian, Chinese and Iranian companies if INPEX did not start.
Some Iranian oil firms have shown interest in developing the field and submitted plans to the Oil Ministry, Iran's Mehr News Agency reported on Wednesday.