TEHRAN (MNA) -- The United States is pressuring Japan to invest in Libya's oil industry instead of a project to tap Iran's giant Azadegan oilfield that has provoked the wrath of Washington, a Bush administration official said, Reuters reported on Friday.

The United States, which has sanctions against U.S. companies doing business in Iran, has persistently expressed its disappointment that its close ally, resource-poor Japan, would invest in the Islamic Republic in a $2 billion project.

"We understand their energy needs. But there is no question that we are emphasizing that Libya is an alternative that is going to come online soon," the administration official, who asked not to be named, said.

The Japanese Embassy in Washington said it had no comment.

The administration official said Japan was sensitive to increasing U.S. concerns about Iran although it did not indicate it would withdraw from an oilfield which is about the size of Tokyo.

Azadegan's estimated 26 billion barrels of reserves is one of the world's largest untapped finds and one of Tehran's biggest international deals since the 1979 Islamic revolution. Japan signed on 18 February a landmark agreement with Iran to develop one of the world's largest oilfields in a move that could rekindle tensions with the U.S.

Japan signed a $2 billion deal with Tehran to jointly develop the massive Azadegan oilfield in southwestern Iran, which holds some of the largest oil reserves in the world.

A consortium of Japanese firms will hold a 75 percent stake in the project to develop the oilfield with estimated reserves of 26 billion barrels while a unit of Iran's state oil company, NIOC, will own the remaining 25 percent.