Arabian Oil Co. President Keiichi Konaga left Friday for Riyadh for last-minute negotiations in an effort to extend his firm's oil concession in a major oil field in the former neutral zone between Saudi Arabia and Kuwait. In an attempt to break the deadlock, Konaga is expected to propose an AOC offer to supplement a 140 billion yen preferential loan proposed by the government to help Riyadh build a 200 billion yen mining railway. AOC's 40-year concession with Riyadh in half of the Khafji oil field is due to expire Sunday. With the Japanese government sternly opposed to offering more for the railway project demanded by Saudi Arabia, AOC is facing diminished expectations for the renewal of the concession. International Trade and Industry Minister Takashi Fukaya told a regular news conference Friday that the government will closely watch the negotiations between Konaga and Saudi Arabia. "I advised Mr. Konaga yesterday to go (back to Saudi Arabia) to negotiate every angle, although he seemed at a loss whether to go (since little time remains). We'd just like to calmly watch over the negotiations," Fukaya said. "No matter what the situation, both governments have ascertained that this issue will not affect in anyway Japan-Saudi relations or their oil supply agreements," he added. AOC's oil concession for the remaining half of Khafji will expire in January 2003.
