Oil dispute fuels tension between China and Japan

China has, according to Japanese reconnaissance data, completed at least one new drilling platform in the East China Sea and may already be tapping into natural gas and oil fields, escalating a dispute with Japan over the rights to billions of dollars worth of underwater energy reserves.

The alleged development has aggravated a potential flash point in East Asia, with diplomatic relations between Tokyo and Beijing already languishing.

The increasingly uneasy relationship between East Asia's two dominant countries also includes territorial disputes and a heated row over Japan's perceived lack of repentance for World War II-era aggression.

Economic ties have grown tremendously between the two nations in recent years, but they remain in fierce regional competition.

Both, for instance, are courting Russia in the hopes of securing an advantageous route for a new trans-Siberian pipeline to the Pacific, and they are locked in a battle for diplomatic and economic influence over a host of Southeast Asian nations.

But Japan has grown so alarmed by China's activities in the East China Sea that it dispatched two envoys to Washington this month to brief Bush administration and State Department officials on what the authorities have described as a "major threat to Japanese sovereignty."

Officials in Tokyo, speaking on the condition of anonymity, said Japanese reconnaissance aircraft in September detected flames atop a stack on a Chinese drilling platform an indication it is functional.

The platform had been under construction for two years but did not function while Japan and China wrangled over drilling rights in the area, about halfway between Shanghai and Okinawa.

A second Chinese drilling platform in the area also appears nearly complete, officials said, and Japan has detected signs that China's state oil company is close to finishing a pipeline to the platforms that would connect them to the Chinese mainland.

Twice in the past six weeks, Japanese officials said, they have detected five warships dispatched by China "in a show of force" near the drilling sites. Beijing has said the ships were merely conducting "ordinary exercises" in the region.

How Japan responds, analysts say, will signal much about whether the Tokyo government is prepared to enter a new era of assertiveness to protect its national interests.

In the post-World War II era, Japan has tended to shy away from anything resembling aggression, choosing to solve disputes through diplomacy instead.

But leading politicians and policymakers have said Japan is ready to take bolder steps. In July, Japan granted a license to Tokyo-based Teikoku Oil Co to conduct its own exploration in the area including in disputed waters.

Japanese officials said they would give a green light to Teikoku to proceed into the East China Sea, perhaps with an escort of Japanese coast guard vessels, if the two nations cannot reach a negotiated settlement in the near term.

Huang Xingyuan, chief spokesman for the Chinese Embassy in Tokyo, said any move by the Japanese to explore for oil or gas supplies in the disputed area would be viewed by Beijing "as an invasion of Chinese territory and be viewed as a highly provocative act."

He would not confirm or deny Japan's claim that China was already drilling in the area, but said, "It is of no importance to the Japanese because the area is completely within Chinese waters and we are within our rights to operate there."

The two drilling platforms in question appear to lie just within the Chinese side of a dividing line that Japan has already acknowledged as separating the territorial waters of both nations.

Japan argues, however, that China is tapping into energy fields that straddle an area claimed by both Japan and China.

Official surveys say the disputed fields contain an estimated 7 trillion cubic feet of natural gas and up to 100 billion barrels of oil.

The Japanese also say China's refusal to provide information on its drilling in the area has made it impossible to determine whether its physical operations have in fact crossed into Japanese-claimed waters. Huang denied that.

They know perfectly well the location of Chinese operations," he said. "And it is not within areas claimed by Japan."

Japan has suggested that the two sides settle the dispute by agreeing to co-develop energy in the East China Sea. China and Japan discussed the proposal in talks earlier this month in Tokyo, but the two sides strongly disagreed on the areas of cooperation.

Japanese officials have said oil exploration by the Japanese firm was unlikely until at least next summer, citing technical and bureaucratic reasons along with a desire to exhaust all attempts at negotiations first.