Gas Field Pawn in China-Japan Row

Aug. 15, 2006: Japanese Prime Minister Junichiro Koizumi (2nd L) follows a Shinto priest during a visit to Yasukuni Shrine in Tokyo on the anniversary of Japan's World War II defeat. Photo: AFP/Kazuhiro Nogi

A dispute between China and Japan over an offshore gas field has flared up again this month, further complicating relations between the two powers.

The latest controversy over the Chunxiao gas field began when the China National Offshore Oil Corporation (CNOOC) posted a report on its Web site claiming it had started production at the deposit in the East China Sea.

CNOOC said that Zhang Guobao, vice minister of China’s National Development and Reform Commission, had visited its drilling platform with other officials for an inspection tour on July 23.

“The first phase of Chunxiao oil and gas field has already entered full-fledged production and development stage,” said Zhang, according to a report by China Daily on August 7.

So I think the Chinese are trying to send a message that there is a price to be paid for these visits, and the Chinese not going to let this issue die,

Conflicting accounts

The remark sparked immediate concern in Japan, which has argued for the past three years that China may be tapping subsurface resources that extend into its offshore economic zone. On August 7, Japanese Vice Foreign Minister Shotaro Yachi denied at a press conference that any startup had taken place.

“We have confirmed through several routes that there is no truth [to the reports],” he said.

In interviews with Radio Free Asia, energy analysts said no one appears to know for sure if CNOOC is producing at the disputed site.

Philip Andrews-Speed, a China energy expert at Scotland’s University of Dundee, said that CNOOC’s work at the Chunxiao gas field is probably not yet at the stage of “commercial production.”

“They’re probably not selling it. It’s probably a long way from the full flow that they’re planning. But they have made the commitment. They’ve done the technical work.”

Dispute about ‘more than gas’

Jason Feer, Singapore bureau chief for Petroleum Argus industry weekly, said the dispute is “much more about the broader relationship [between China and Japan] than it is about the gas.”

Zhang Guobao’s visit to Chunxiao and reports of production at the site came less than two weeks before a scheduled visit by Japanese Prime Minister Junichiro Koizumi to the Yasukuni Shrine on August 15.

The Yasukini Shrine honors Japanese war dead, and Beijing regularly criticizes visits by Japanese leaders to the shrine as displaying inadequate contrition for atrocities committed by Japan during World War II.

But China’s activity at the gas field was probably not intended to influence Koizumi, who will step down in September, said Feer. “I do think it’s aimed at the Japanese politicians who are maneuvering to succeed him as prime minister,” he added.

“So I think the Chinese are trying to send a message that there is a price to be paid for these visits, and the Chinese not going to let this issue die.”

Philip Andrews-Speed agreed that the problem of the Chunxiao gas field reflects larger disagreements between China and Japan. He noted that the two countries have been unwilling to accept a joint-development deal until historical differences are resolved.

“The fact that neither side is determined to do anything together suggests that there is a wider [issue] at stake and that they’re using [Chunxiao] as a bargaining chip in some sort of negotiation,” he said.

“But it’s very difficult to see who’s going to give what.”

Original reporting by Michael Lelyveld. Edited for the Web by Richard Finney.


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