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Japan Energy Delegation to Visit Iran next Week

TOKYO, Aug 16 (Reuters) - A Japanese government delegation will visit Iran, Japan's third-largest source of oil, early next week for a first-ever round of high-level bilateral energy talks, a Ministry of International Trade and Industry (MITI) official said on Wednesday.

He said the talks would focus on general energy issues and were unlikely to discuss specifics on financial aid and investment for Iran or oil and gas supplies to Japan.

But the talks could pave the way for Tokyo to deepen its ties with Iran, which the United States has labelled a state sponsor of terrorism and subjected to sanctions.

A U.S. law threatening sanctions against foreign energy firms investing in Libya and Iran is set to expire in August of next year, and several European oil companies are already defying the law to take advantage of their U.S. rivals' absence in Iran.

The MITI official said a 10-member delegation, led by Natural Resources and Energy Agency Director-General Hirobumi Kawano, will meet in Tehran with Iranian Deputy Oil Minister Seyed Mehdi Hosseini and other Iranian officials.

The two countries agreed to a summer round of bilateral talks when Hosseini visited Tokyo in May and met then-Trade Minister Takashi Fukaya.

VAGUE AGENDA

"The tentative agenda is mainly to exchange opinions on the two countries' energy policies and on such topics as oil, gas, electricity and energy conservation. This will be just a first step, just sitting down at the same table," the MITI official said.

Japan, reliant on imports for nearly all of its energy supplies, is stepping up its efforts to boost ties with major oil and gas producers.

Neglect of these ties was held partly to blame for the loss of a 40-year-old oil concession by private Japanese oil developer Arabian Oil Co Ltd in February in the Saudi Arabian section of the Neutral Zone shared with Kuwait.

Japan tightened economic sanctions against Iran in 1993, following the lead of the United States, but after the 1997 election of Iranian President Mohammad Khatami, a moderate, Tokyo resumed a dialogue with Tehran on government loans.

In August of last year, Japan lifted a six-year freeze on loans to Iran and agreed to proceed with a 7.5 billion yen dam construction loan suspended in 1993. Media reports have said Japan would also start extending fresh loans ot Iran ahead of Khatami's expected visit to Tokyo by the end of the year.

The MITI official said, however, that Japanese firms may not necessarily be seeking additional oil supplies from Iran, given Japan's eagerness to diversify its sources of oil, more than 85 percent of which comes from the Middle East.

Another MITI official told Reuters in June that Japan wanted to sound out the possibility of an oil field development contract with Iran that might include participation by Japanese firms.

Japanese companies remain wary about doing business in Iran, however, due in part to delayed payment of hefty amounts of debt taken on by Iran in the early 1990s.

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