Oct. 6 (Bloomberg) -- Inpex Holdings Inc., Japan's biggest oil explorer, may cut its 75 percent stake in Iran's Azadegan oilfield to avoid being pushed out of the Middle East country's largest discovery in 30 years.

Government-controlled Inpex is in talks with National Iranian Oil Co., Japanese Trade Minister Akira Amari told reporters in Tokyo today. Japan's Yomiuri newspaper said the company agreed to sell a stake of more than 55 percent to the Iranian state oil company. Inpex will brief reporters in Tokyo at 7:30 p.m. local time.

Japan needs the $2.5 billion project to help meet a goal of getting 40 percent of oil imports from assets it controls. Iran may give China and Russia access to the Azadegan field in return for support at the United Nations, which might consider sanctions over Iran's nuclear program.

``It would be a big loss for Japan if it's removed from the Azadegan project,'' said Tomomichi Akuta, an energy researcher at UFJ Institute Ltd. ``China needs to secure oil and has money, while Iran has energy assets.''

Inpex Director Katsujiro Kida will speak at the press conference, the company said in a statement.

Japan's government, which has a 29.4 percent stake in Inpex, on Oct. 2 said it will withdraw support for the 260,000 barrel a day Azadegan project if the United Nations imposes sanctions on Iran because of its nuclear program.

Reduced Concession

Amari declined to confirm or deny whether Tokyo-based Inpex has been removed from the project. Kunihiko Matsuo, the company's chairman, is in Iran for talks and the company may make a statement soon, Amari said.

``It's possible to have a reduction in the concession,'' Amari said. ``They're talking about several things including shares of the project.''

Inpex won the right to lead development of the oilfield in February 2004. The company has said it can't start work until Iran removes landmines laid during the 1980-1988 war with Iraq. The dispute over Iran's nuclear program has increased scrutiny of Japan's role in Azadegan.

Shares of Inpex rose 1.8 percent to close at 888,000 yen on the Tokyo Stock Exchange today. The stock has fallen 19 percent this year.

China

China, which overtook Japan as the world's second-biggest oil consumer in 2002, has acquired oil and gas assets from Nigeria to Kazakhstan to mitigate the cost of rising energy imports. Iran offers China access to the world's second-largest proven oil and gas reserves

China Petrochemical Corp., the nation's second-biggest oil company, has agreed to help Iran develop the Yadavaran oilfield and may get half the field's output, under the terms of a 2004 accord. Officials from Iran and China on Sept. 12 said the countries had agreed to develop reserves in the Islamic Republic's southwest.

Iran may develop Azadegan in partnership with Russia or China failing an agreement with Japan, Kyodo News said on Aug. 27, citing Mehdi Bazargan, managing director of Iran's state oil company.

Japan may find it difficult to achieve its target of increasing output from overseas oil assets to 40 percent of its consumption by 2030 without Azadegan, Amari said on Sept. 27.

Older Fields

Iran's new oil discoveries are failing to keep pace with the depletion of its existing reserves. The country needs to add as much as 400,000 barrels of new daily oil output each year to keep production even, the state oil company said last year.

``The main purpose for Iran is to get the field developed and right now they are not able to,'' said Sachi Sakanashi, an analyst on Iranian affairs at the Institute of Energy Economics, Japan. ``Iran may be hoping China and Russia will come in.''

Japan, Asia's biggest oil importer, got 13.8 percent of its oil from Iran in 2005, making the Middle East nation its third- biggest source of oil.

U.S. Secretary of State Condoleezza Rice and diplomats from the other permanent members of the UN Security Council, plus Germany, will meet in London today to discuss Iran, State Department Spokesman Sean McCormack said yesterday. The British envoy to the UN said Britain may ask the council to take up Iran's nuclear program next week.

The U.S. and European Union say Iran's nuclear-power program is aimed at developing weapons, which would put the country in breach of treaty obligations. Iran denies it's trying to build an atomic bomb and says its program is intended for energy.

Russia, which has veto power as one of the five permanent members of the Security Council, yesterday reiterated its opposition to immediate sanctions.

To contact the reporter on this story: Megumi Yamanaka in Tokyo at myamanaka@bloomberg.net.

Last Updated: October 6, 2006 05:45 EDT