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Mon, Nov 15, 2004 - Page 12 News List

Energy rivalry likely to fuel debate APEC meet

ECONOMIC IMPERATIVE Chinese President Hu Jintao is set to propose initiative to stabililize oil markets as Beijing and Tokyo seek to expand their sources for oil and gas

AFP , BEIJING

China and Japan's voracious appetite for oil is set to become a major topic at the APEC summit in Chile, as high prices threaten the world economic outlook and the two nations battle over global reserves.

Chinese President Hu Jintao (胡錦濤) will propose an energy initiative at the Nov. 20-21 meeting to try to stabililize energy markets in the wake of his country's growing demand and the war in Iraq, said Assistant Foreign Minister Shen Guofang (沈國放).

But Chinese officials refused to say if Hu would hold a bilateral summit with Japanese Prime Minister Junihiro Koizumi, despite an increasingly testy row over energy that has seen the two oil-strapped nations vie for resources around the world and in disputed territory in their own backyards.

Hu will present an initiative "to improve cooperation in terms of energy resources, developing new energy and energy poverty alleviation," Shen told reporters.

"The aim is to create an energy environment that will benefit all parties to deal with the challenges in the fluctuations of the energy market and the rise in the oil prices and achieve sustainable development," he said.

China's breakneck economic growth, expected to come in at 9.25 percent this year, has been accompanied by a skyrocketing demand for energy. Last year it overtook Japan as the world's second largest oil importer after the US.

In bilateral meetings on the sidelines of the summit, Japanese and Chinese participation in huge Russian energy projects was also likely to be debated, diplomats said.

Japan and China have for years been competing over the eventual destination for a multi-billion dollar oil pipeline from Siberia as they seek alternative energy sources in a tight market and amid continued violence in the Middle East.

The issue was at the center of recent bilateral summits between Russia and China and Japan and will likely again be discussed when Russian President Vladimir Putin separately meets Hu and Koizumi in Santiago, diplomats said.

China is also in talks with Russia to become an end-user of natural gas from the Russian Sakhalin Island gasfields that were earlier earmarked for sole Japanese consumption, Japanese Trade Minister Shoichi Nakagawa said this month.

ExxonMobil, which leads the Sakhalin-1 project with a 30 percent stake, indicated to Nakagawa in talks in Tokyo that a top Chinese oil company had joined the bidding for gas. Japan is one of the key backers of the Sakhalin-1 and Sakhalin-2 oil projects, which have attracted about US$22 billion in investment.

Besides Russian resources, Tokyo is also concerned about a Chinese gasfield project in disputed waters in the East China Sea. It is afraid Beijing could extract resources from reserves that extend into what it says is Japan's exclusive economic development zone.

Late last month China's leading People's Daily accused Japan of shadowing and disrupting Chinese energy projects around the world, including in Russia, Iran, Sudan and Australia.

Before the APEC summit, Hu was visiting Brazil and Argentina. China's state-owned oil companies were expected to negotiate to take part in regional energy projects and tap into local oil reserves.

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