China and Japan struggle to narrow energy divide

China and Japan have bathed their bruised ties with soothing rhetoric ahead of a visit by Chinese Premier Wen Jiabao, but they remain far apart in settling energy disputes that dog the relationship.

‘On the one hand, there’s resurgent nationalism in Japan that makes it hard for them to give away anything,’ Mark Valencia, a Hawaii-based expert on maritime politics in Asia, told Reuters.

‘But on the other hand, there is a growingly desperate need on both sides for the oil and gas from this area.’
The amount of fuel found so far, in a cluster of fields in the Xihu trough and nearby Pinghu field, is relatively small.

Chunxiao has by far the biggest net gas reserves, and operator CNOOC Ltd. puts these at just 4.8 billion cubic metres – enough to meet a month of last year’s demand.

But current supplies are not the main driving force of the dispute.

‘It’s more about the future than the present,’ said Leo Drollas, chief economist at the Centre for Global Energy Studies.

‘You don’t know what these basins are like, they could be quite prolific and so they want to stake out their rights to these resources,’ he added.

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