Japan to grant drilling rights in disputed fields

Japan to grant drilling rights in disputed fields

Shino Yuasa, Agence France-Presse/Tokyo

Japan said on Wednesday it would allow its firms to explore for gas and oil in waters disputed with China, a move likely to aggravate already high tensions between the two nations.

Japan gave the go-ahead just days after violent anti-Japanese protests in China and despite a warning by Beijing earlier this month that such a move "will further escalate the situation."

China began drilling in 2003 at the disputed site in the East China Sea, which a 1999 Japanese survey estimated had a massive 200 billion cubic meters (seven trillion cubic feet) of gas.

Japan's ministry of economy, trade and industry said it would begin reviewing applications from companies which want to explore the Japanese exclusive economic zone of the fields -- a delineation not recognized by China.

"It is a process. We will press forward accordingly," Prime Minister Junichiro Koizumi told reporters.

Asked if the move could further worsen relations with China, Koizumi said: "This is a separate matter."

Chief Cabinet Secretary Hiroyuki Hosoda told a separate news conference: "We have long discussed the exploration rights and already informed (China) about that. Now the time is ripe."

The Japanese decision will raise the stakes for a meeting Sunday in Beijing between Japanese Foreign Minister Nobutaka Machimura and his counterpart Li Zhaoxing about their troubled relationship.

Asked if the gas issue would come up in Beijing, Hosoda said: "I think it's likely."

Japan and China, two of the world's biggest energy importers, have seen their relations persistently worsen. In November Japan sent a formal protest after it spotted a Chinese nuclear submarine in the area of the gas fields, leading to a two-day chase on the high seas.

Ties have become even more tense in the past week as thousands of Chinese took part in rowdy weekend protests against Japan, pelting its embassy with bottles and cans and urging a boycott of Japanese goods.

The demonstrations were called after Japan approved a nationalist-written textbook which allegedly whitewashes its bloody wartime occupation of its Asian neighbors including China.

Machimura said on Wednesday he may propose Sunday in China a joint study group into their shared history, a move the foreign minister hopes could ease virulent anti-Japanese sentiment.

Japan and China have summoned each other's ambassadors and demanded an apology during the latest row. Tokyo wants compensation for the protests and Beijing believes Tokyo must do more to atone for its militarist past.

Chinese Premier Wen Jiabao, speaking on Tuesday in India, targeted Japan's cherished goal of a permanent seat on the United Nations Security Council, saying Tokyo needed to face up to its history before being admitted.

China has rejected Japanese efforts to mark a maritime border in the disputed part of the East China Sea, which may also hold oil along with gas.

Japan believes China has already tapped into resources which Tokyo considers part of its sector, through the Chunxiao and Duangqiao gasfields.

Industry sources said it would take roughly three billion yen (US$28 million) to drill a single well.

News reports said it could take a few months before the companies were authorized to explore, let alone begin drilling, and the government could decide to halt the activity.

"It is pleasing to hear about the news as we have long been interested in drilling the area," said a spokesman for major oilfield developer Japan Petroleum Exploration Co.

"We are considering applying for it on condition that the project can be commercialized," the spokesman said. "We also need to confirm that this uneasy situation with China would not affect our business."