Japan, China study splitting gas profits – report

Japan and China are considering splitting profits from gas fields in disputed waters in the East China Sea, a Japanese daily reported on Monday, as the two sides race to resolve a row over resources ahead of a visit by Chinese President Hu Jintao in the spring.

The Nikkei business daily said the two countries were negotiating a compromise to set aside their long-running dispute over sovereignty in the area and move ahead with joint development, although Japan’s top government spokesman disputed the report.
“I believe the article is inaccurate to a considerable extent,” Chief Cabinet Secretary Nobutaka Machimura told reporters. He did not elaborate.

Under the proposal, Japan would put up more than half the cost of developing gas fields closer to itself, while China would do the same for the gas fields closer to itself, the Nikkei said.

The profit that each country would receive from each gas field would be determined by its portion of the investment, the paper said, adding that Japan and China hope to eventually work out a plan by which overall profits are split evenly. A Japanese government source said Tokyo has proposed jointly developing fields that straddle what Japan says is the line that separates the two countries’ exclusive economic zones.

“China is quite positive about the idea of jointly developing gas fields to the east of the median line (closer to Japan), but not those to the west of the line,” the source told Reuters.

Reuters