East China sea gas : Japan ready to full scale drilling

Japan will prepare to grant exploratory drilling rights
in disputed waters of the East China Sea adjacent to
where China hopes to launch full-scale drilling for
natural gas, industry minister Shoichi Nakagawa said
Friday.

His comments came on the heels of an announcement that
the Ministry of Economy, Trade and Industry has
completed a geophysical survey that found that the two
natural gas reserves China is currently developing
extend into Japan's exclusive economic zone.

Unless Beijing releases data on the deposits it is
tapping, Japan will conduct its own test drilling for
oil and gas, he said.

The minister said: "We want China to suspend drilling.
We have repeatedly and politely requested China to
release data (on the reserves) so that we can seek a
cooperative solution (to issues) in these waters."

Nakagawa's remarks are the latest development in Japan's
ongoing disputes with China, South Korea and Russia over
rights to develop undersea oil and gas fields.

In particular, Tokyo and Beijing -- the second- and
third-largest consumers of energy in the world,
respectively -- have clashed often, as energy prices
soar.

"If China does not respond in good faith to our
requests, we must proceed to the next step," Nakagawa
said.

Tokyo will wait "about one week" after notifying China
of its survey results, then prepare to designate areas
for drilling, he said.

Japan has no exploratory vessel of its own. It
chartered a seismic ship from Norway in July 2004 for
its geophysical survey to determine if the undersea
natural gas reserves China is tapping, roughly halfway
between Okinawa Prefecture and China, extend into waters
claimed by Japan.

Chinese Coast Guard ships approached the exploratory
vessel, sending it repeated radio warnings and nearly
colliding with it at one point, according to Nakagawa.

METI officials said test-drilling at one location in the
disputed region would cost at least 3 billion yen. They
said the government plans to shoulder all costs for
exploration companies due to the high economic risks.

"This is not a project that private businesses can carry
out alone," a ministry official said. "The government
will entrust those companies to test-drill in the sea
area."

It could be months before Japanese firms begin
exploration, the officials said.

Several companies have already applied to do the
test-drilling, according to the officials.

JY & Information from Kyodo added