Japan Urges China to Give Gas Field Details

Beijing must provide more detail about its efforts to develop natural gas reserves in a disputed area of the East China Sea, and it needs to spell out more clearly its suggestion of joint exploitation of the reserves before Tokyo could even consider bilateral development, a top Japanese energy official said.

Amid intense competition for natural resources with its energy-hungry Chinese neighbor, Japan's government will continue to ask China to provide it with data to clarify whether the gas field it's developing extends into Japanese territory, said Nobuyori Kodaira, director-general of the Agency for Natural Resources and Energy.

"We believe that the structure of the Chunxiao gas field overlaps the Japanese-Chinese border. China is continuing the development there and we would like information provided on that," he told Dow Jones Newswires in recent interview.

"We've asked for this numerous, numerous times at various levels."

The condition before we can pursue any kind of talks is provision of the information, he said, adding "with absolutely no response to our request, it's problematic that there's a request for joint development - the content of which is unclear," he added.

"Therefore, at this point, we aren't thinking of getting involved in joint development," he said.

The energy spat comes at a time when China is increasingly flexing its economic as well as diplomatic and defense muscles in the region.

Despite the fact that it's expected to become Japan's largest trading partner in a decade, some Japanese officials see the country as an emerging threat.

That view was underscored in a Nihon Keizai Shimbun report on Sept. 15 saying that an advisory panel to Japanese Prime Minister Junichiro Koizumi is expected to call China a "military threat" in a report due out later this month.


Earlier in September, the Chinese Foreign Ministry refused Japan's request for data on the Chunxiao gas field, but said the two nations should look to jointly develop the area.

Chinese Foreign Ministry spokesman Kong Quan said the gas field is in a section of the East China Sea close to the disputed boundary between the two nations' exclusive economic zones.

Kong added the dividing line was unilaterally set by Japan without negotiation.

Kodaira, however, said that Beijing didn't start to make claims in the area until after a 1970 survey by the UN Economic Commission For Asia and the Far East survey showed the potential for large oil and gas reserves in the area.

Since October last year, the Japanese government has been using diplomatic routes to ask China not to extend gas exploration work into territory claimed by Tokyo.

In June, Economy, Trade and Industry Minister Shoichi Nakagawa, who oversees the energy agency, held bilateral talks with the vice chairman of China's National Development and Reform Commission, Zhang Guobao, in Manila on China's gas exploration in the East China Sea.

Nakagawa asked Beijing to provide Tokyo with the information on the development.

After the talks, the Japanese government said two Chinese companies, together with two other foreign firms, had started exploration of the offshore field.

The field is located 400 kilometers from the southern Japanese island of Okinawa, and in an area where the two nations claim exclusive economic rights.

Kodaira added that resolution of the gas field issue was needed to facilitate Japanese cooperation with China in the energy sector, but said that cooperation in the Asian region, including China, was necessary in the medium-to long-term, as the region's energy demand increases.


In the past 18 months, Japan and China - heavily dependent on imported energy - have competed for overseas natural gas and crude oil sources.

Early in 2004, China halted a 30-year-old deal to supply large volumes of its Daqing crude oil to Japan, reflecting its need to secure long-term energy supplies to meet its booming petroleum demand at a time when domestic oil output is peaking.

The competition has also embroiled another regional power, Russia, as the two nations are also wrestling over the terminus of an oil pipeline from huge Eastern Siberia oil fields.

In the 1990's, China started negotiation with Russia's YUKOS (YUKO.RS) for a crude pipeline from Siberian Angarsk fields to Daqing in Northern China, in an effort to have easy access to low-sulfur crude oil supplies.

But since last year Tokyo has been intensely lobbying Moscow to back a Japanese-backed project to construct a pipeline terminating on Russia's Pacific coast at Nakhodka. From there, crude could be shipped to Japan, China, South Korea, and the U.S.

Kodaira said that discussions with Japan on the pipeline and its cost couldn't start in earnest until Russia finishes its feasibility study on the project and makes a route decision.

"Frankly, we are just watching things now," he said. "A decision by Russia would be the starting point for talks."

In May, in some of most open comments on Japan's proposal, Russia's new envoy to Japan said that Moscow strongly favors a pipeline route that would bring Siberian oil just 800 kilometers from ports on Japan's west coast.

"This Nakhodka route is much more favorable to our own interests," Ambassador Alexander Losyukov told Dow Jones Newswires in an interview, saying that it would supply energy for developing the Russian Far East and create an opportunity to sell oil to Japan and others.

To be sure, oil industry insiders say that it may not be a done deal, saying that there are many uncertainties, including the possibility that Tokyo may balk at the apparent ballooning costs estimates for the pipeline project.

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