Japan likely to face other problems besides US opposition in its $2.2 billion move into Iran...
Japan may face other problems besides US opposition in its $2.2 billion move into Iran, according to analysts.
A main source of complications could be location. The oil field is located about 10 kilometers from the Iranian border with Iraq, where security is anything but assured. In fact, the perceived investment risks led to earlier opposition to the project from within Inpex Corp., the oil exploration firm leading the Japanese consortium
In addition to location, Japanese oil companies are also concerned about the profitability of the project. Because the consortium is bound by the contract to work the oil field for a limited period and receive oil in return for the work, it will be difficult for it to generate profits unless it extends the work period
Some observers point to past losses suffered by Japanese businesses in Iran due to wars, political upheaval, and other reasons.
Others also question the absence of any private-sector oil company in the consortium. Inpex and another consortium member, Japan Petroleum Exploration Co., are controlled by the government-affiliated Japan National Oil Corp. Analysts say the involvement of private-sector oil firms is indispensable because the project will call for the establishment of sales channels and procurement of operational funds, among other things.
