Thursday, June 19, 2008

Less Meets the Eye on the East China Sea Agreement Agreement(s)

Of the four gas fields in the June 15 Asahi report recorded here, only Shirakaba/Chungxiao was actually included in the final agreement. Instead of Asunaro/CanxueLongjing, included in the June 1617 Yomiuri report recorded here, an area nearby was designated as a “block for joint development”. Shirakaba/Chungxiao itself is carefully separated from the “joint development” part of the agreement. The Japanese METI/MOFA joint announcement of the agreement can be found on this webpage. The Chinese MOFA spokesman’s remarks are here.

Two things help to understand this agreement. One is the following quote from the Chinese spokesman’s remarks:

Chinese enterprises welcome the participation of Japanese legal person in the development of the existing oil and gas field in Chunxiao (sic) in accordance with the relevant laws of China governing cooperation with foreign enterprises in the exploration and exploitation of offshore petroleum resources.*

The governments of China and Japan have confirmed this…

The other is the set of coordinates for the block for joint development. I don’t have the means to actually plot out the coordinates against the Japan/China median line, but if the map on the Yomiuri front page is to be trusted, the area lies mostly on the Japanese side, with the northeast corner going over the median line.

Production from Shirakaba/Chungxiao (note that the Chinese announcement only says Chungxiao), which according to Japanese surveys extends to the Japanese side of the median line, will continue under exclusive Chinese jurisdiction, while most of the joint development activities will presumably be conducted on the Japanese side of the median line. Although the Chinese side says that “the two sides will conduct cooperation in the transitional period prior to delimitation without prejudicing their respective legal positions”, it is clear that the two sides have established de facto joint custody of the disputed area of the continental shelf between the median line and the boundary claimed by the Chinese side.

This will become clearer when, as I expect, exploration, development and production are conducted as a joint venture between a Japanese entity and a Chinese entity, each subject to the laws of their respective state of origin. Technically, this will infringe upon the mining rights—exploration and/or exploitation rights; both property rights under the Mining Law and the Civil Code—of the Japanese entity.** But I doubt that the Japanese entity will complain.

As a legal matter, the only way that Japanese opponents of this deal—there will be many if my reasoning is correct—can stop this is to establish exploration rights on their own before the Japanese entity does. Unfortunately for prospective dissidents, they are unlikely to be able to provide the required data that must accompany an application.

But there’s the political side of the issue. I can see people like LDP China hawks like Shoichi Nakagawa and powerful independent Takeo Hiranuma lining up against the agreement. But they should be more than counterbalanced by LDP members who want to make nice with China or don’t see any benefit in causing a ruckus over what is, after all, trivial in terms of the economic benefits and all but irrelevant to Japan’s energy security. So I guess my question is: will the DPJ see this as a wedge issue and side with the dissidents?

As for the media, Sankei issued a favorable editorial today, apparently under a misunderstanding based on what turned out to be an erroneous report that Shirakaba/Chungxiao and Asunaro/CanxueLongjing were to be the subject of joint development. The question here is: Can you take back an editorial?

There you are. Feel free to quote me.

* The Japanese announcement says more or less the same thing.

** It would also violate the Japanese property rights of the owner of the seabed surface if it were Japanese territory. I’m sure what the law is beyond territorial waters, but the owner, if any, would be the Japanese government, so this point is moot.

Sidebar: Why did the media reports grow progressively less favorable to the Japanese side?*** They obviously took leaks from the Japanese side reflecting its negotiating position of the moment and over-interpreted them. My guess is that the leaks came from officials only tangentially related to the negotiations. The principals know too much to give out information that raises false hopes, and won’t have the time to talk to reporters roaming the corridors anyway.

*** ADD note (June 20): The June 17 Yomiuri article was more accurate than I had believed, since it says “area around Asunaro/Longjing”, not Asunaro/Longjing per se. My only excuse is that it was easy to miss the distinction sans hindsight. But my broader point stands.


Sun Bin said...

another reason for the leak was proabably deliberate, as requested by china.

china may want to gauge its own domestic have reaction, but it lacks such unofficial media, so it may have asked japan to do this for them.

Jun Okumura said...

Sounds plausible to me, and you obviously have greater experience in probing the depths of the Chinese authorities.