China, Japan have "useful" talks on sea dispute

BEIJING, May 25 (Reuters) China and Japan had ''useful'' talks today aimed at settling their sea territory spat which centres on disputed energy reserves, with the two agreeing to meet again next month, Beijing said.

Both sides ''expressed their opinions on the question of the joint development of the eastern sea'', China's Foreign Ministry said in a short statement on its Web site (www.fmprc.gov.cn).

It did not elaborate further.

The Chinese Foreign Ministry's Director of the Asian Affairs Department Hu Zhengyue, who led the country's delegation, called the talks ''a new beginning'' for both sides, Xinhua news agency said.

''Hu said China is ready to make joint efforts with Japan to push forward consultations,'' the report added.

Both sides are eager to secure oil and gas supplies but disagree over where the sea boundary separating their exclusive economic zones should lie.

Development in the East China Sea has long fuelled tension between the two neighbours, just one of several bilateral disputes, most dating back to Japan's invasion and brutal occupation of parts of China from 1931-1945.

Japan objects to Chinese development of undersea gas near what Tokyo calls the border. Although the Chinese drilling is in an undisputed area, Tokyo fears the development could drain gas from its side by tapping into geological features that reach into areas it claims.

During a bridge-building visit by Chinese Premier Wen Jiabao to Japan last month, the two nations agreed to intensify talks over developing oil and gas fields in the disputed waters and to propose concrete measures by autumn.

The China Daily, an English-language paper that generally reflects government thinking, said today that the talks would test ''the two countries' dramatic ice-thawing talks in Tokyo last month'', referring to Wen's visit.

Seven previous sessions on the sea dispute since 2004 had produced little progress, the China Daily also noted.

Although the two have talked about the possibility of joint development for years, they have each handed out unilateral exploration permits for border areas.

China's CNOOC Ltd. confirmed in April that it has begun producing gas at a field in the sea despite Japan's objections.

CNOOC's gas output from the Tianwaitian field last year was equivalent to a relatively modest 4 million cubic feet per day, the company said in its annual report.

But an industry source said at the time of the disclosure that actual output was then running at 500,000 cubic metres a day.

REUTERS RJ MIR KP1920