China Japan Oil Rivalry
Japan needs friends who are rich in natural resources, and Prime Minister Junichiro Koizumi made no bones about what he wanted from Uzbekistan and Kazakhstan when he became the first Japanese premier to visit the two countries last month.
The country is hardly alone, however, in looking to parts of the former Soviet Union to meet its energy needs from new sources, and indeed, rivalry among East Asian nations may well intensify as they compete to woo the region.
Only days after Koizumi left the region last week, China National Petroleum Corp., China`s largest oil producer, said that together with Korea National Oil Corp., Malaysia`s Petronas, Lukoil of Russia, and local group Uzbekneftegaz, it had obtained a 20-percent stake in a joint oil and gas exploration project in Uzbekistan`s Aral Sea extending about 10,000 square kilometers that potentially has 8 trillion cubic feet of natural gas.
ยป Source: M&C News
Each company is expected to have an equal stake in the project, which will start with collecting seismic data and drilling two wells in the first three years starting April 2007 before moving on to full-fledged exploration of the site. The companies expect production to begin as early as 2012 depending on the results under the 35-year deal that will require an initial investment of about $100 million, with drilling costs reaching $200 million, according to the companies` joint statement. China`s People`s Daily newspaper Tuesday reported, however, that CNPC and Uzbekneftegaz are expected to take the lead in the project, given that the two companies had signed exploration agreements for five onshore blocks this summer, which could lead to as many as 27 wells in five years.
The Uzbek deals follow CNPC`s acquisition of a 12-percent stake in Petro Kazkhstan last year for $4.18 billion, thereby extending the Chinese energy group`s commitment to secure energy sources from central Asia.
Meanwhile, securing energy sources was clearly on the top of Koizumi`s agenda when he visited Uzbekistan and Kazakhstan last month, particularly at a time when depending too heavily on the Middle East as the single-biggest source of petroleum imports seems increasingly risky amid heightened political risks in the conflict-ridden region.
Still, simply ensuring a steady supply of energy that would lessen Japan`s dependence on the Middle East was not the sole reason for Koizumi`s visit. In fact, the Japanese media often concentrated more on the political implications of the visit to the area where China as well as Russia have been exerting greater influence in recent years.
‘I hope my visit underlines Japan`s intention to have closer ties with Uzbekistan and shows Japan has much interest in Central Asia and intends to work more actively here,’ Koizumi said following his meeting with Uzbek President Islam Karimov, who has boosted the country`s ties with Russia as well as China in recent years in part in reaction to criticism of his authoritarian rule by industrialized nations.
Hopes for stronger ties with Kazakhstan go beyond oil, however, as the country is home to the world`s second-largest reserves of uranium while Japan is one of the biggest users of nuclear power in the world. Indeed, some of Japan`s biggest trading companies, including Marubeni, have urged Koizumi to press ahead with uranium mining rights in the country, given that China, South Korea, and the United States as well as Japan are the biggest buyers of the country`s supply of the natural resource.
The national atomic energy company KazAtomProm had signed a contract with Sumitomo Corp. and Kansai Electric Power earlier this year to operate a uranium mine, but currently, Kazakhstan supplies only a fraction of Japan`s uranium needs, though KazAtomProm is one of the four biggest uranium-producing companies in the world.
