Japan makes strides in China oil quests
Japan makes strides in China oil quests
TOKYO (Reuter): Japan's long-term quest to secure oil and gas reserves in Asia has gained considerable ground in recent weeks, analysts say.
On Wednesday, it pocketed rights to a 7,400 square km (2,860 square mile) chunk of remote but potentially lucrative terrain in China's Tarim Basin, to be surveyed by the state-run Japan National Oil Corp (JNOC).
Just a week earlier, a Japanese-led consortium drilled two appraisal wells in the US$12 billion Sakhalin 1 project off Russia's far eastern island of Sakhalin -- a symbolic milestone in what has been a long hike for Japan across an often rocky diplomatic divide with its neighbor to the north.
That news followed an announcement in late May by JNOC that the company would conduct a geological survey in Russia's resource-rich Irkutsk region, north of Mongolia.
"JNOC and other Japan oil companies are looking to get into anything that is economically feasible at the moment, especially in the Asia-Pacific region, because Japan's security-of-supply issues are still of paramount concern," said Craig Pennington, Asian oil and gas analyst for UBS Securities Ltd in Tokyo.
Latest Trade Ministry data shows that nearly 83 percent of Japan's ravenous 4.8-million barrel-per-day crude oil appetite is sated by suppliers from the politically sensitive Middle East. In 1995, that figure was just 78.2 percent.
Concern about this trend, Pennington said, has led the JNOC to boost its efforts to secure alternative crude oil sources closer to home -- first negotiating on behalf of Japan oil companies interested in purchasing stakes in potential projects, then providing preferential treatment for the firms in its role as operator.
"This is a very busy and exciting time for us," said an official at JNOC.
JNOC's most recent deal, concluded on Wednesday in Beijing, allows the company to conduct a three-year survey of the Tarim basin's Misaray concession, in China's northwestern Xinjiang region.
JNOC says the Chinese government estimates the concession's reserves at between 160 million and 610 million barrels.
A parallel deal was struck between the China National Petroleum Corp (CNPC) and four private Japanese firms for rights to exploit reserves discovered in the survey.
The four are Japan Energy Corp (50 percent), Japan Petroleum Exploration Co Ltd (30 percent), Indonesia Petroleum Ltd (10 percent) and Sumitomo Corp [8053.T] (10 percent).
In late May, JNOC signed an agreement allowing it to conduct a geological survey in the Nepa-Botuobin region of Russia's Irkutsk region.
JNOC will cover the 260 million yen ($2.24 million) cost of the survey, to be conducted in conjunction with its Russian partner in the deal, Irkutskgeofizika.
In April, JNOC also reached an agreement with Kazakstan to conduct a seismic survey and test drilling in two separate areas northwest of the Aral Sea which are estimated to have reserves of 500 million barrels each.