Japan and Iran have agreed to continue talks beyond the Friday deadline over developing the giant Azadegan oil field, trade chief Toshihiro Nikai indicated Friday.

"I understand (the talks) will be extended," Nikai said of negotiations between Tehran and Japan's Inpex Corp. to finalize a $2 billion deal to develop the Azadegan field.

Nikai, minister of economy, trade and industry, refrained from clarifying the government's stance on the negotiations.

"It has become a complicated political issue involved with matters including (Iran's) nuclear development program," he said. "We would like to follow developments carefully."

Inpex, which is linked with the Japanese government, holds the concessions for developing the oil field in southern Iran. The company says it has yet to start working the field partly because Iran's removal of explosive mines from the area is unfinished.

An Iranian news agency has reported that Tehran, worried by Inpex's slow action, warned Japan last month it could seek joint development of Azadegan with Russia or China if an agreement wasn't reached by Sept. 15.

The Azadegan field is one of the world's largest, with estimated crude oil reserves of 26 billion barrels.

The Iranian developer, an affiliate of National Iranian Oil Co., is in charge of negotiations with Japanese companies over the development deal.