In a decision likely to anger China, the Japanese government on Thursday awarded local firm Teikoku Oil Co. rights to test-drill in a gas field near part of the East China Sea disputed by the two countries, Reuters reported. Japan and China, which rely heavily on energy imports and are anxious to secure new energy sources, have been at odds over China's exploration for natural gas near areas that Japan claims as being within its own exclusive economic zone. Relations between the two countries have soured recently due to a range of disputes, including Japanese Prime Minister Junichiro Koizumi's annual visits to a shrine where convicted war criminals are honoured along with Japan's 2.5 million war dead. Prior to the announcement in Tokyo, China had urged Japan not to grant the rights. "If Japan obstinately grants its enterprises test-drilling rights, China would see that as constituting serious damage to its interests and rights within China's sovereignty and it will further complicate the situation in the East China Sea," Foreign Ministry spokesman Liu Jianchao told a news briefing in Beijing. "China strongly urges Japan not to take any actions that are unfavourable to stability in the East China Sea and the final situation of overall China-Japan relations," he added. Teikoku, a Japanese oil and gas exploration company, applied in April for drilling rights to three blocks in an area spanning 42,000 square km (16,220 sq miles). Japan Petroleum Exploration Co. and Nippon Oil Corp. have also expressed an interest in exploring the area. China is already active in the region, with CNOOC, the country's top offshore oil and gas producer, due to begin commercial operations this year, and Japan is concerned Chinese drilling could draw gas from what it considers its zone. --more 1121 Local Time 0821 GMT
