The possibility of Iran restoring the contract for the development of the giant Azadegan oilfield in the west of the country following the suspension of sanctions against the Islamic Repubic has been raised in talks with a delegation of Japanese business people that visited Tehran earlier in August, media in Iran and Tokyo have reported.

Japan’s Kyodo News reported an unnamed but senior Iran official as saying on 10 August that Japanese companies could resume work on the field. The report was repeated by Press TV, the English-language broadcaster affiliated with the official Islamic Republic of Iran Broadcasting.

The Azadegan field, which lies west of Ahvaz and extends across the border into Iraq, was discovered in 1999. It has oil-in-place reserves of about 33.2 billion barrels and recoverable reserves estimated at 5.2 billion barrels. It is the largest new field discovered in Iran for more than three decades. It is located west of Ahvaz in south-west Iran and crosses into Iraq.

Inpex Corporation, Japan’s largest oil and gas exploration and production company, was awarded the contract to develop the field by the National Iranian Oil Company (NIOC) in 2004. The Japanese company reduced its stake in the project to 10 per cent from 75 per cent in 2006, signalling Japan’s disapproval of Iran’s nuclear programme. The Azadegan Petroleum Develpment was set up that year with a 10 per cent Inpex shareholding.

Inpex announced in October 2010 that had decided to withdraw from the project. The previous month, the Japanese government had announced it was suspending new oil and gas investments in Iran and freezing the assets of 88 organisations and people.

The project for the development of Azadegan south was transferred to China National Petroleum Company (CNPC), but its $2.5 billion contract was cancelled in 2014 amid Iranian complaints that progress had been unacceptably slow. The daily Tehran Times reported CNPC had drilled only seven of the wells it was contracted to deliver.

CNPC is continuing to work on the Azadegan north field project.

Japan imported an average of more than 190,000 barrels a day (b/d) of Iranian oil in May according to figures released by Japan’s Ministry of Economy, Trade & Industry. It imported 313,00 b/d in 2011 when Iranian oil accounted for about 9 per cent of oil imports into Japan, which is wholly dependent upon foreign oil and gas.

Central Bank of Iran governor Valiollah Seif was reported as telling the Japanese business mission on 8 August that he would like to see Japanese banks open in Iran.