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."