Foreign Correspondence

[Amaunet]

China warns Japan in tussle over gas
By Mariko Sanchanta in Tokyo
Published: July 2 2004 5:00 / Last Updated: July 2 2004 5:00

China has issued its strongest warning yet to Japan about the exploration for natural gas in the East China Sea, as the dispute between the two countries escalates to unprecedented levels.


The two countries are at loggerheads over China's development of a potentially lucrative natural gas field which lies near the border of Japan's exclusive economic zone (EEZ) in the East China Sea. In response, Japan this week announced it would launch its own exploration studies next week.

"Japan should consider the bigger picture of maintaining relations between the two countries and should consider stability in the East China Sea area," said Zhang Qiyue, China's foreign ministry spokeswoman.

A Japanese foreign ministry official responded: "We have no intention of inflaming public sentiment. We hope that the Chinese side will deal with this in a calculated and quiet manner."

The field is estimated to contain up to 200bn cubic metres of natural gas, and Japanese energy officials have said privately there are very good prospects of sizeable oil reserves as well.

Both Japan and China are in a race to reduce their dependence on Middle Eastern countries in energy procurement. Japan, which has almost no natural resources, has made it a strategic aim to diversify supplies, with increasing use of gas a priority. China is aiming to reduce its reliance on coal for both economic and environmental reasons, and wants to increase its consumption of natural gas.

Shoichi Nakagawa, Japan's trade minister, flew over the Chinese natural gas complex on Wednesday to observe the development. Last month Tokyo lodged a complaint with Beijing saying the Chinese gas project could violate the boundaries of the Japanese EEZ, siphoning off natural gas from it.

The two countries have also argued about the exact boundary of the EEZ.

Japan says it is the line equidistant from the coasts of both countries, while China has said it extends to the end of the continental shelf.

The gas field, in fact, is located 4km from the centre line, in China's EEZ.

The Chinese government signed contracts with oil development companies in China and other countries including Britain and the US, in August 2003, without informing Japan of its plans. China has suggested that the two countries jointly develop the field, but Japan has rejected the proposal.



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