Agence France Presse

Tokyo, June 1:

Japan plans to speed up test-drilling of gas fields contested with China and put the project under government control after bilateral talks on the dispute ended in stalemate, a newspaper said on Wednesday.

Japan in April said it would let private companies apply to explore potentially huge gas and oil fields in the East China Sea. But amid rising tension with China, Tokyo will make any selected company work under government contract, the Mainichi Shimbun said.

The daily said the Japanese government wanted to show it was dedicated to the project and believed the move would speed it up, with a company to be granted drilling rights as soon as mid-2005. The government will also shoulder test-drilling costs estimated at $27-36 million, the daily said without identifying its sources.

Chief Cabinet Secretary Hiroyuki Hosoda, the government spokesman, denied any immediate plans to put the project under government control but said the decision was not final. “It will take two to three months to decide whether to grant test-drilling rights,” Hosoda told a news conference.

“At the moment there is no plan to make test-drilling a consignment of the national government.”

China began drilling unilaterally in the gas fields in 2003. China and Japan ended two days of talks in stalemate on Tuesday with Beijing refusing Tokyo’s demand to halt its exploration, officials said.

The discussions came at a time of tense relations between the Asian nations with China accusing Japan of failing to atone for its bloody occupation that ended in 1945.