A Japanese consortium and Royal Dutch Shell have agreed to develop jointly the Azadegan oil field in Iran with an investment of about $8 billion, the Yomiuri Shimbunnewspaper said today.
It will be the biggest oil field development undertaken by Japan.
The consortium - Japan National Oil Corporation (JNOC), Japan Petroleum Exploitation Co, Indonesia Petroleum Ltd and general trader Tomen Corp. - have already acquired preferential rights to develop the field.
Two-thirds of the investment will be borne by the Japanese consortium and the rest by the Anglo-Dutch oil giant, the newspaper said quoting unidentified sources.
The Japanese consortium needs the oil field development know-how that Royal Dutch can provide, the sources said.
Funding will be provided mostly by JNOC and the Japan Bank for International Cooperation - both semi-governmental organizations, the Yomiuri said.
Japan's government will present the outline of the development plan to the Iranian government on Monday, the Yomiuri quoted the sources as saying.
The field, which was discovered in 1999, has estimated recoverable reserves of at least five to six billion barrels and 26 billion barrels of in-place reserves. It was the largest oil find since Russia found the Priobye field in 1982.
According to the joint development plan, production is expected to begin in 2005 or 2006, with daily output of 700,000 to 800,000 barrels at its peak, the Yomiuri said.
Most of the crude is expected to be exported to Japan.