Aug. 28 (Bloomberg) -- Iranian Foreign Minister Kamal Kharazi said his government will begin talks with United Nations' officials over allowing UN inspectors to make spot checks on Iran's nuclear facilities.

``Iran is going to expand its cooperation with the International Atomic Energy Agency,'' the UN's nuclear watchdog, Kharazi told Japan's trade minister Takeo Hiranuma in Tokyo. ``We've decided to start negotiations toward signing the additional protocol,'' he said, according to a statement from Japan's Ministry of Economy, Trade and Industry.

The additional protocol would allow UN inspectors to check Iranian nuclear sites without warning. The UN has asked Iran to sign the agreement following demands from the U.S. and other nations that say the Middle East country is using the facilities to develop nuclear weapons. Iran denies the charge.

UN inspectors reported on June 6 that Iran has failed to disclose materials, facilities and activities required by its current agreement with the IAEA. If Iran agrees to the extra agreement it may pave the way for Japan to sign a $2.5 billion contract to develop the country's Azadegan oil field, Iran's biggest oil discovery in 35 years.

In June, Japan was close to agreement on developing the Azadegan field, which analysts say has as much as 6 billion barrels of recoverable oil, when the U.S. opposed Japanese investment on concern Tehran is developing nuclear weapons.

Iran has the world's fifth-largest proven oil reserves, holding about 90 billion barrels, or about 9 percent of the total reserves. Japan is the world's second-biggest importer of crude oil.

Full Cooperation

``By fully cooperating with the IAEA - by signing the additional protocol as early as possible - and by implementing it unconditionally, we expect Iran to dispel the international community's concerns,'' Japan's Hiranuma told Kharazi, according to the trade ministry's statement.

Iran is one of the countries U.S. President George W. Bush includes in a so-called Axis of Evil, along with Iraq and North Korea. In the post-Iraq War period, Bush has renewed calls for tough sanctions because of Iran's alleged nuclear weapons development. Tehran denies the allegations and says its nuclear program is aimed at generating electricity.

``We don't have any programs to develop nuclear weapons,'' Kharazi told Cable News Network in an interview. Iran will accept more intrusive inspections ``as long as Iran's rights and dignity'' are respected, he said.

Iran is a signatory to the UN's Nuclear Non-Proliferation Treaty, aimed at curbing the spread of nuclear weapons. The new agreement on allowing UN inspectors to make spot checks on Iran's nuclear facilities would complement the existing treaty.

Japan, which imports almost 99 percent of its oil, considers its efforts to secure oil a separate issue from international concerns over Iran's nuclear program, Japan's Foreign Minister Yoriko Kawaguchi told reporters yesterday.

``We do share the concerns of the international community on the nuclear issue,'' Kawaguchi said. ``We are as a separate matter currently engaged in discussion with Iran on oil.''

Japan is close to a deal with Iran on developing the Azadegan field, Hiranuma said this week. Japan sees the agreement to develop the field as a key step toward securing its oil needs.

``We have reached substantial compromises on some points,'' Hiranuma said at a press conference in Tokyo on Aug. 26. ``We still need to tie up loose ends.''

Energy Competition

Japan is competing with China and other countries to secure stable sources of oil and gas. Winning access to the Iranian oil field will help ensure the world's second-largest economy does not run out of energy.

``Our nation considers it a significantly important project'' to ensure stable crude oil supplies, Hiranuma told Kharazi today.

Kharazi is on a three-day visit to Japan. Earlier this morning he handed over to Japanese Prime Minister Junichiro Koizumi a letter from Iranian President Mohammad Khatami that said Iran will expand cooperation with the IAEA.

Last Updated: August 28, 2003 05:28 EDT