Midway between Okinawa and China, a Norwegian seismic ship is performing seemingly routine survey work this spring, trawling with long seismic cables and using sound waves to create three-dimensional images of oil and gas deposits. But nothing is routine when Japan commissions a survey of what is hidden below the contested waters of the East China Sea.
Chinese coast guard ships treat the surveyors on the Ramform Victory as spies, radioing warnings to leave and shadowing the ship for days on end. On one occasion, the Chinese ships nearly collided with the vessel. Japan's trade minister, flying in a Japan Coast Guard plane, conducted an ostentatious survey, circling over the bright yellow gas production platform that China is building 1.6km west of waters claimed by Japan.
Confronting the Chinese face to face, the trade minister, Shoichi Nakagawa, later sat down in front of a Chinese negotiator, dropped two straws in a glass of orange juice, and, foregoing customary Japanese politeness, complained that China was about to "suck out Japan's resources with a straw." The seismic ship, he said, according to ministry officials, found that two deposits under development by China extend into Japanese economic waters.
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In days of sharply higher energy prices, long-dormant border disputes have suddenly come alive for Japan. Long cocooned by its buffer waters, Japan is suddenly bumping shoulders over undersea oil and gas resources with China, South Korea and Russia.
In talks in Tokyo on Monday between Japan and China, the world's second and third-largest oil consumers after the US, Japanese negotiators demanded that China share their drilling data or drop the project, wire services reported. The Chinese rejected the demand and repeated their proposal for a joint venture. But calls are mounting for a Japanese-only project in waters of the East China Sea that both nations claim. On Friday, a ruling party panel urged Japan's government to invite Japanese companies to drill in the area, a call bolstered by the simultaneous release of a Foreign Ministry report that China conducted 22 "illegal" surveys of Japanese economic waters last year.
Tensions also are flaring between Japan and South Korea over a disputed island group. To the north of Japan, Japanese companies are investing about US$1 billion a year to develop oil and gas reserves off Sakhalin, a Russian island that was half-owned by Japan until the end of World War II.
And last fall, Asia's broadest economic shoulders, China and Japan, bumped over a pipeline to bring Siberian oil to Asia. Japan won the first round when Russia went for billions of dollars in Japanese financing to build the pipeline to the Sea of Japan.
In response, Chinese Prime Minister Wen Jiabao (
Spurred by high energy prices, China is pursuing a new energy realpolitik. Entering the Americas, Chinese energy officials are running rings around the US, exploring deals with Canada, Cuba, Mexico and Venezuela. In Northeast Asia, the fact that China now is Japan's largest trading partner is not stopping China from potentially draining gas from what Japan calls its exclusive economic zone.
In the energy brinkmanship on the high seas west of Okinawa Island, China's US$1 billion project is to pump its first gas in August, sending the fuel through a 480km pipeline to Shanghai. Compounding Japan's loss of face, Nakagawa told the Diet last month that the first 416km of the line was built with US$120 million of Japanese development aid.
Japan now is tripling its research budget in the East China Sea, to US$125 million this year, and is spending US$100 million to build its own seismic survey ship. On Feb. 22, a day after Prime Minister Junichiro Koizumi appealed to make the East China Sea "a sea of cooperation, not a sea of conflict," Nakagawa told reporters, "We will definitely call on China to stop its work."
He said he might soon authorize two Japanese companies to start drilling in the contested area.
To strengthen oil and gas exploration worldwide, Japan is to disband the Japan National Oil Corp, its state-run energy exploration company, on April 1. With a record of drilling largely dry holes in its 305 projects around the world, the company ends 38 years of existence with almost US$7 billion in losses.
Its successor, the Inpex Corp, was listed on the Tokyo Stock Exchange last fall and is to be run on profit-making lines. Inheriting some of the state company's oil and gas reserves, Inpex will start as a midsized multinational exploration company, similar in reserves toUnocal.
Over the next three years, Japanese oil companies and trading houses are to invest about US$20 billion in oil and gas exploration and production, roughly double the level of the last three years, according to Nihon Keizai Shimbun. Since the late 1960s, China and Japan have suspected that the waters between China and Okinawa contain large deposits of oil and gas.
"In the Japanese area, there is a high possibility we can find not only gas but oil," Tsutomu Toichi, managing director of the Institute of Energy Economics, a nonprofit group in Tokyo, said in an interview.
With the economic boundary in dispute, Asia's two giants had let the energy riches lie untouched, focusing instead on their larger economic relationship.
Soon, China became Japan's largest destination for foreign investment. Last year, China displaced the US as Japan's largest trading partner. But with China's economy growing at 9.5 percent last year, and at an annual rate of 8.4 percent since 2000, Chinese officials fear energy shortages will cap growth.
Over the next 25 years, China's dependency on imported oil will double, hitting 80 percent of its total consumption, according to forecasts by the International Energy Agency, an intergovernmental agency based in Paris. In one setback, two foreign companies, the Royal Dutch/Shell Group and Unocal, dropped out last fall from the Chinese gas development west of here, then China's largest gas joint venture with foreign partners.
Both companies cited commercial reasons, but a high-ranking Japanese energy official who asked not to be identified: "Commercial reasons include political risks. I think they judged that it's not worth doing, even taking political risks."
Undeterred, the Chinese partners, the China National Offshore Oil Corp and the China Petrochemical Corp, said they would march ahead with plans to start producing this summer. The Chinese may have the last laugh. China National is considering a US$14 billion takeover of Unocal.
As Chinese workers extend the seabed pipeline to the edge of Japan's claimed economic waters, Nakagawa said that preliminary results from his agency's survey work last year indicate that two of three major gas fields China plans to develop in the area extend into Japan.
"We demand that China hand over data and stop exploration in the East China Sea until this problem is resolved," said Nakagawa, a conservative with prime-ministerial ambitions.
China's Foreign Ministry spokesman Kong Quan (孔泉) replied that the two fields "completely fall under the framework of China's rights."
As the coast guards of both countries brace for confrontations this spring, Yomiuri Shimbun has reported that Beijing has awarded Chinese energy companies exploration rights over 12 blocks that extend into Japanese economic waters. Of the 12, three are entirely inside the Japanese economic area.
The UN Convention on the Law of the Sea gives each coastal nation an economic control zone extending 368km from shorelines. But the distance between Okinawa and China is about 640km.
Japan advocates a median line between the two countries. China advocates using as its economic border the eastern extension of the continental shelf, which moves the economic border to an area 80km west of the Ryukyu archipelago.
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