Japanese oil company fails to renew Saudi concession

by The Associated Press

Japan’s biggest oil producer failed to reach an agreement with Saudi Arabia to renew an oil concession set to expire in less than 24 hours, Japan’s trade minister said Feb. 27, according to news reports.

Japan’s International Trade and Industry Minister Takashi Fukaya said last-ditch talks held in Riyadh, Saudi Arabia over the weekend between the president of Tokyo-based Arabian Oil Co. and Saudi officials ended without a breakthrough, Kyodo News agency reported.

“I don’t know if the talks are suspended or have broken down for good, but they’re over,” he told reporters after being briefed by Arabian Oil President Keiichi Konaga, Kyodo said.

Nobody could be reached at the trade ministry for comment, and Arabian Oil spokesman Koichi Sekikawa declined to address the report.

Arabian Oil’s 42-year-old concession in the eastern part of Saudia Arabia, the only remaining one held by a foreign company, was set to expire Feb. 28 at 6:00 a.m. Japan time (2100 GMT).

Negotiations to extend the drilling rights were bogged down by Saudi Arabia’s demand that Japan build and pay for a new railway line as a condition for renewal.

The Japanese government most recently offered to pay between $600 million and $700 million of the $2 billion railway project, according to Kyodo, citing sources close to the talks.

Arabian Oil pumps an average of 300,000 barrels of oil a day from the Kafji oil field. Though the company has drilling rights in Kuwait, the loss is expected to halve its sales.