By Huseyin Erdogan
ANKARA
The four-point principled agreement between China and Japan on handling and improving bilateral relations can completely change energy geopolitics in the region, said head of the International Energy Association.
Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe held a meeting Monday on the sidelines of an Asia-Pacific summit hosted by Beijing, after a two-year suspension of high level talks over territorial claims of a disputed Diaoyu island.
The four-point agreement includes mutual benefits for China and Japan. The two sides have agreed to gradually resume political, diplomatic and security dialogue through various multilateral and bilateral channels and to make efforts to build political trust, according to the statement.
The agreement is important for Japan in terms of energy supply security as the world's biggest liquefied natural gas importer, according to Gurkan Kumbaroglu, the president of the Ohio-based International Association for Energy Economics, IAEE.
After the Fukushima disaster in Japan in 2011, natural gas particularly liquefied natural gas became a very important energy source for Japan, according to Kumbaroglu.
The dispute between China and Japan is also said to be primarily regarding oil and natural gas reserves in the East China Sea.
The Energy Information Administration estimates that the East China Sea has about 200 million barrels of oil in proved and probable reserves and 30 billion cubic meters of proved and probable natural gas reserves. Chinese sources claim that undiscovered resources can be as high as 70 to 160 billion barrels of oil, and as much as 7.5 trillion cubic meters of undiscovered natural gas resources in the entire East China Sea.
"If China's estimations are right, this region can be considered an oil reserve similar to Iran, and in terms of natural gas, like Saudi Arabia," he underlined.
Myanmar has a key role in the region as well because of the China-Myanmar deal in 2009 which could allow Japan to get its piped natural gas through China if the deal is implemented, according to Kumbaroglu.
"Both China and Japan are interested in extracting hydrocarbon resources from the East China Sea to help meet domestic demand. However, the unresolved territorial and maritime claims and limited evidence of hydrocarbon reserves make it unlikely that the region will become a major new source of hydrocarbon production," said the U.S. Energy Information Administration.
China was the second-largest net oil importer in the world in 2013, behind the United States, and the world's largest global energy consumer, says the U.S. agency.
Japan is the third-largest net importer of crude oil behind the United States and China, as well as the world's largest importer of liquefied natural gas, owing to the country having few domestic energy resources, according to the agency.
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