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Japan appears intent on finalizing a $2.5 billion deal to develop Iran's giant Azadegan oil field, despite pressure from the United States to scrap the planned investment. A Japanese diplomatic source tells Stratfor that Washington's private warnings on the project have been softer than its public ones, suggesting that President George W. Bush's administration might not go so far as to invoke sanctions against Japan under the Iran-Libya Sanctions Act (ILSA) to kill the deal.
Osaka-based Tomen Corp. and two units of Japan's state oil company lost priority rights to negotiate a deal on Azadegan when they failed to close an agreement by June 30. Various U.S. officials lobbied Japan against the deal up to the deadline and have since continued to openly warn Japan against it. However, the diplomatic source says Tokyo considers the Azadegan project -- expected to yield 300,000 barrels of crude oil a day for more than 20 years -- as too important for Japan's energy security to abandon.
Japanese officials reportedly are lobbying the White House via the U.S. State Department, while continuing to work quietly with Iran. Part of that negotiation includes pressuring Tehran to make its nuclear program more open -- an effort to reduce U.S. pressure for both sides.
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