Oil, gas bounty in disputed sea area not a given

BEIJING (Kyodo) No one has shown that natural gas or oil exists under a region of the East China Sea hotly disputed by Japan and China, and anything that turns up may be too little to justify the drilling expenses, people in the energy industry say.

Although China plans to drill in an area Japan claims will lead to an undersea natural gas vein in its exclusive economic zone, energy experts say no survey has shown that anything commercially profitable exists in the region.

Speculation strong enough to cause a chronic diplomatic row between Tokyo and Beijing comes from comparing the contested region geologically with other Western Pacific tracts that have produced fossil fuels, energy analysts say.

One successful strike is the Xihu Trench, 200 km east-southeast of Shanghai. Petroleum companies have also tapped the seabed in China's Bohai Bay and another area near Indonesia.

"No one's got any reliable data. It's speculative still," said Scott Brock, senior associate with Cambridge Energy Research Associates in Beijing. No company has begun drilling, he added, so survey results to date probably indicate that any gas or oil below the seabed is "not commercially viable."

Survey vessels work the region nonstop for shock waves that indicate seabed salt domes or other evidence of fuel. Only drilling can prove oil or gas exists.

"Everyone's trying to figure out what's there before they have to agree to anything," Brock said.

China has been looking for oil and gas in the region since the 1980s but found nothing, said Tatsu Kambara, petroleum consultant with the Institute of Energy Economics in Japan, who called the East China Sea area's natural gas capacity "small" and not profitable. China might be exploring for "face" value, Kambara added.

Last September, Royal Dutch/Shell Group, an Anglo-Dutch company, and U.S.-based Unocal Corp. pulled out of a Chinese-led natural gas project in the disputed area, which is about 400 km east of Shanghai, about halfway between the coasts of Japan and China. Industry analysts say the foreign firms saw little revenue potential.

Tension over gas and oil that might not exist indicates a deepening energy crisis for Japan and China, neither of which can depend on energy from its own territory, said Lester Brown, president of the Washington-based Earth Policy Institute and author of books on resource scarcity in Asia.

"We're moving into uncharted territory," Brown said. "It is indicative of how oil or potential oil and gas reserves are becoming (part of) the emerging geopolitics of scarcity."

Neither government has let on whether it has found anything.

Chinese Foreign Ministry spokesman Liu Jianchao said Thursday he could not "predict" how much oil or gas would turn up, but added that China hopes it and Japan could explore together.