CHINA - JAPAN: Ready to settle gas row by splitting profit

Japan and China are considering settling their long-standing dispute over gas fields by evenly splitting profits from joint development in the East China Sea, a Japanese newspaper said Monday.

A trade ministry official here denied the report, but both countries have said they want a breakthrough before a rare visit to Tokyo by Chinese President Hu Jintao.

Japan and China, two of the world's largest energy importers, have failed in 11 rounds of talks since 2004 to reach any breakthrough on sharing lucrative gas resources in the East China Sea.

In a proposal under discussion, Beijing and Tokyo would jointly develop the gas fields and set a formula for taking profits based on each country's investment and geographical proximity, the Nikkei business daily said.

The overall goal would be for the two countries to split the profits evenly, said the newspaper, which did not identify its sources.

A trade ministry official in charge of the matter denied the report, saying: "Negotiations have not yet reached the level of discussing those details as reported in the paper Monday."

"We are still in the process of determining the areas which can be explored jointly," the official, Takehiko Nagai, told AFP.

However, high-level negotiations are expected to resume later this month as both sides hope to have a basic agreement in place before Hu's visit to Japan, he said.

Hu is due to visit Japan in the spring, in only the second visit by a Chinese head of state to Tokyo and the first such trip in a decade. The exact date has not been set.

Relations between the two countries remain uneasy over their wartime history. China refused all high-level contact with Japan during the 2001-2006 premiership of Junichiro Koizumi due to his visits to a shrine venerating Japanese war dead, including war criminals.

Tensions have also been high over the gas dispute. China started drilling in 2003 and Japan has charged that Beijing may be siphoning off what it considers its own gas reserves. Food safety has also become an issue between the Asian powers with hundreds of Japanese last week saying they had fallen ill from dumplings made in China.

Source: Agency France Presse