Japan, China strike deal on joint gas project

Updated June 19, 2008 04:57:15

Anti-Japan protesters, outside the Japanese embassy in Beijing, shout slogans against the East China Sea deal. [AFP]

Japan and China say they have struck a deal to jointly develop gas fields in the East China Sea.

The agreement comes after four years of on-off talks and partly resolves an issue that has long affected relations between the two major energy importers.

Under the deal, Japan and China will jointly explore a 2,700-square-kilometre area south of the Asunaro gas field in the East China Sea, which China calls Longjing.

Japan's private sector will also invest in China's ongoing development of the Chunxiao gas field, which Japan calls Shirakaba.

But the two sides have failed to resolve their disagreement over two other gas fields in the area.

The two countries disagree on the location of their joint border, with Japan arguing it is at the mid-way point between the two countries, while China claims its continental shelf extends much closer to Japan.

Our correspondent in Tokyo, Shane McLeod, says the deal rests on an understanding that the border dispute will remain unresolved while oil and gas development can continue.

Leaders hail deal

Japan's prime minister, Yasuo Fukuda, has hailed the deal over the East China Sea.

"We will try to turn it into a sea of peace and friendship. We will develop gas fields in the area by cooperating with each other," he said.

Japan's foreign minister, Masahiko Komura, has called the deal a concrete step in reconciliation between the two countries, which have often had uneasy relations.

"This is a good example of how we can resolve a difficult problem through dialogue," he said.

In Beijing, a Chinese foreign ministry statement says the deal will contribute to the "healthy and stable development of China-Japan relations."

"It is in line with the fundamental interests of the two countries and their people," it said.

But outside the Japanese embassy, Chinese authorities - who generally tightly control protests - allowed 15 nationalists to stage a demonstration, shouting slogans such as "Japan get out of the East China Sea."

Authorities made no effort to disperse the crowd and, unusually, even allocated a space for journalists, who were allowed to interview the demonstrators.

Japan, China relations

China's relations with Japan have long been tense due to the legacy of Tokyo's imperialism before and during World War II.

China insists that its sovereign zone in the East China Sea extends nearly up to Japan's southern island chain of Okinawa and had firmly rejected Japan's earlier proposals for a median line dividing the gas fields.

China started drilling in Chunxiao in 2003, inflaming tensions with Japan, which voiced worries that Beijing may siphon gas from what it considered its own side.

In 2004, amid sour political relations, a Chinese nuclear submarine intruded into Japan's waters near the gas fields, setting off a two-day chase on the high seas.