The additional sanctions come in response to Iran's uranium enrichment program, which the West suspects masks a drive to develop nuclear weapons, but which Tehran says is aimed solely at generating electricity to meet the needs of its growing population.
Under the new sanctions, state-owned Japan Bank for International Corporation and the Nippon Export and Investment Insurance, or NEXI, will not enter into any new commitments for export credit running for two years or more in all trade sectors, including energy. The move will make it difficult for
Japanese companies to make any new investments in oil and gas projects, which are usually long term.
In addition, NEXI will exercises "utmost due diligence with strict conditions" when providing a short-term export credit for trade with Iran.
In a statement following the cabinet decision, Minister of Economy, Trade and Industry Masayuki Naoshima said that the government has urged companies on "cautious response" and to "refrain" from all new oil and gas projects in Iran and pay "careful attention" to existing energy contracts with the country.
The government also cautioned the local industry on Japan's energy trade with Iran.
The measures, however, will not restrict or apply to Japanese refiners' crude imports from Iran. "The crude trade with Iran is significantly important for Japan," Naoshima told reporters.
If the measures had been applied to crude imports, it "could possibly have significant impact not only on Japan but on the world," he said. "Such moves could also deteriorate the relationship between Japan and Iran. Today's [Friday's] administrative measure is to do with new oil and gas investments.
This is not [designed to make Japan] refrain from crude trades."
In 2009, Iran was Japan's fourth largest crude supplier after Saudi Arabia, the UAE and Qatar, providing 421,000 b/d or 12% of the country's total imports, data compiled by METI showed.
NO IMMEDIATE IMPACT ON GIANT AZADEGAN PROJECT
Asked about possible impact on Inpex's participation in Iran's giant onshore oil field Azadegan, Naoshima said: "Under the current circumstances, there is no major change in the Azadegan project."
An Inpex spokesman, said separately that it intends to discuss with the government on its participation in the Azadegan oil field, following the additional sanctions.
"We are aware of the government's additional sanctions against Iran," the spokesman said. The government has asked Japanese companies to "pay careful attention to existing energy contracts with Iran" and the Azadegan project falls under this category, he added.
"Therefore, we would like to consult the government to see how we should be responding to the project," the spokesman said.
Inpex currently holds a 10% stake in the Azadegan field. It agreed to cut its stake in the project from 75% and transfer operatorship of the field to Naftiran Intertrade Company -- a wholly owned subsidiary of project partner National Iranian Oil Company -- in October 2006 over political and public
funding concerns. METI holds roughly 19% of Inpex.
Output from Azadegan has reached 50,000 b/d following the startup of a number of new wells early 2010. Production from the field started at between 10,000 b/d and 20,000 b/d in early 2008 but failed to reach a target of 50,000 b/d by March 2009.
REACTING TO UN SANCTIONS
On August 3, the Japanese cabinet approved a decision to impose sanctions against Iran over its nuclear program, in line with latest UN sanctions. The measures include an asset freeze on 40 Iranian entities and one individual suspected of being involved in nuclear and missile development.
A day later, on August 4, senior US government officials visiting Tokyo for talks with the Japanese government welcomed the cabinet's announcement. Robert Einhorn, special adviser for non-proliferation and arms control at the State Department, urged the Japanese government to take steps beyond the UN requirement.
Einhorn said both sides had discussed the UN Security Council resolutions and possible national measures. "Japan imports a lot of oil from Iran but the steps we are asking Japan to take will not interfere in any way with Japan's energy security and its import of oil from Iran," he said at the time.
Early July, President Barack Obama signed into law new US sanctions directly targeting Iran's oil and gas sector, including a ban on the export of refined petroleum products to the country.
In late July, the European Union followed suit, formalizing a toughened sanctions package that includes measures aimed at preventing investment in Iran's energy sector. Canada and Australia have announced similar moves.
China Chemical Weekly: http://news.chemnet.com/en/detail-1411716.html
