China's top offshore oil and gas producer, CNOOC Ltd, will begin operations this year at a gas field in the East China Sea despite a territorial dispute with Japan. CNOOC Chairman Fu Chengyu told reporters on Tuesday he expected the Chunxiao field, located south of Japan, to begin operations in August and September. "The dispute over land or waters doesn't exist," Fu told reporters when asked about competing claims to the area. "The Japanese government and media don't have any reason to say that they own that land or to say that they own the hydrocarbons."
On Monday Japanese media reported Japan had demanded that China halt construction at the Chunxiao natural gas field.
Hydrocarbon deposits were found in the early 1970s in the islands that Japan calls Senkakus and China calls Diaoyus.
In 2004 China's construction of the Chunxiao natural gas production plant 5 kilometres (3 miles) from the disputed area aggravated tensions between the countries. Japanese oil firms await government approval for exploratory drilling for gas after a geological survey was started in mid-2004.
Japan also renewed its request for China to provide detailed information about the gas field development project, Japanese media reported.
The field's gas reserves were estimated at 200 billion cubic metres by a 1999 Japanese survey.
CNOOC, listed in Hong Kong and New York, is the main operator of Chunxiao. The other operator is Beijing-controlled Sinopec Corp, Asia's largest refiner.
Royal Dutch/Shell and Unocal Corp pulled out of the natural gas project in September, citing commercial reasons. Chinese industry sources said the pull-out was to end disputes between Sinopec and the foreign firms over development costs and reserve potential.
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