(Adds industry comment)
By Linda Sieg
TOKYO, June 16 Japan and China have agreed to
jointly develop gas fields and share profits in disputed areas of
the East China Sea, Kyodo news agency reported on Monday, in a
further sign of warming ties between the two countries.
The reported accord follows a May summit between Japanese
Prime Minister Yasuo Fukuda and Chinese President Hu Jintao at
which the two leaders agreed to settle the long-running gas feud.
Estimated net known reserves in the disputed fields are a
modest 92 million barrels of oil equivalent, Chinese figures
show, but both countries have pursued the issue, lured by the
possibility of much bigger deposits being found.
The dispute has come to symbolise more than an argument over
maritime gas rights by the two energy-hungry countries, because
it concerns matters of territory and sovereignty.
Quoting sources close to Japan-China relations, Kyodo said
the two sides had decided to set aside the territorial feud for
now and agree on joint gas field development.
"If it is true, this is a great leap forward," said Phil
Deans, a professor of international affairs at Temple University
in Tokyo. "Two years ago, the two sides were so entrenched and
incapable of compromise it looked as if they were never going to
Kyodo said an announcement of the deal could come as early as
this week, but Japan's top government spokesman told a news
conference details were still being worked out.
"I have heard that they are at the stage of working out final
details," Chief Cabinet Secretary Nobutaka Machimura said.
China's Foreign Ministry had no immediate comment.
Sino-Japanese ties chilled during Junichiro Koizumi's
2001-2005 tenure as Japan's prime minister, partly because of his
visits to a war shrine seen in Beijing as a symbol of Tokyo's
past military aggression in China in the 1930s and 1940s.
But relations have improved markedly since then between the
two Asian powers, linked closely by trade and investment.
At the heart of the dispute is a row over where the boundary
of the two countries' maritime economic zones falls.
Japan says the median line between the two countries' coasts
marks the divide. China says the boundary is defined by its
continental shelf, extending its zone towards Japan.
Tokyo has objected to Chinese development of the Chunxiao gas
field, which lies just west of what Japan considers the boundary,
and fears drilling there could drain gas through a honeycomb of
seabed rocks from what Tokyo sees as its economic zone.
Kyodo said Beijing had agreed Japan could invest in and claim
profits from projects, including Chunxiao, and in waters around
other fields that China calls Duanqiao and Longjing.
China's state-controlled CNOOC Ltd (0883.HK) has said it was
ready to begin production from the Chunxiao gas field but it was
not clear if it had done so yet.
Nippon Oil 5001.T, Japan's top refiner, and China's
National Petroleum Corp last year signed an accord for long-term
business cooperation, including overseas oil and natural gas
resources development. Nippon Oil has a stake in the area but not
in the Chunxiao gas fields.
An industry executive in China familiar with the fields said
firms were keenly awaiting the results of the talks, but after
that more work would be needed on the size of the fields.
"Companies need to sit down and nail down the reserve base
for joint development," he said.
(Additional reporting by Yoko Kubota, Chikafumi Hodo and Yuko
Inoue in Tokyo and Chris Buckley in Beijing; Editing by Rodney
Joyce and Michael Watson)