Abstract

In 2004, a government-backed Japanese consortium signed an agreement with the government of Iran to develop the major Azadegan oil field. Not only has the project been given the go-ahead despite numerous political obstacles and poor prospects attributed it, but the agreement also appears to be in conflict with Japan's energy policy, materializing from the mid 1980s to date. Consequently it is important to evaluate Azadegan in terms of Japan's evolving oil policy. Three alternative arguments are proposed to evaluate the quality of policy change: Japanspecial relationship’, bureaucratic factors in the energy policy-making process, and the rise of China. The conclusion emerging from this article is that the rise of China and the growing competition between Tokyo and Beijing in the Middle East and elsewhere are the primary factors in Japan's decision to conclude the Azadegan oil deal. The Azadegan case study therefore sets a new precedent for Japanese energy policy which emphasizes the political and strategic rather than economic factors leading this policy formulation