Press Conference 1 July 2003

1. Agreement-in-principle on ceasefire and start of the withdrawal of Israeli forces from the Palestinian Territories
2. Questions concerning possible pipeline from Eastern Siberian oil field
3. Questions concerning possible Iranian oil project

1. Agreement-in-principle on ceasefire and start of the withdrawal of Israeli forces from the Palestinian Territories

   Press Secretary Hatsuhisa Takashima: Good afternoon, thank you very much for coming to this briefing. Today I have one announcement I would like to make.

   The Government of Japan welcomes the new development in the Middle East which is that several Palestinian factions expressed that they would suspend the attacks against Israelis for a certain period, and the Israeli Defense Forces have withdrawn from the northern part of Gaza.

   Japan highly values aggressive efforts by Prime Minister Mahmoud Abbas of the Palestinian Authority and the positive decision by the Israeli government. At the same time, Japan highly praises positive and constructive diplomatic efforts made by the United States of America, the Arab Republic of Egypt and others.

   Japan hopes that all the parties concerned make utmost efforts to ensure end of violence through, firstly, steady implementation of the ceasefire by the Palestinian side, further withdrawal by the Israeli Defense Forces, and promotion of the security cooperation between the Israelis and the Palestinians.

   Related Information (Statement by the Press Secretary/Director-General for Press and Public Relations, Ministry of Foreign Affairs, on the Agreement-in- Principle on Ceasefire and Start of the Withdrawal from the Palestinian Territories)
   
2. Questions concerning possible pipeline from Eastern Siberian oil field

   Q: Actually, there are two issues that I am interested in. One is relating to the possibility of a pipeline from the Russian Far East to Japan. The other relates to negotiations with Iran.

   First on the pipeline, though I am not fully informed on this issue, Minister for Foreign Affairs Yoriko Kawaguchi recently visited Vladivostok. First, what further diplomatic moves are definitely planned following the Foreign Minister's visit to the Russian Federation in relation to this?

   Mr. Takashima: Director-General Iwao Okamoto of the Agency for Natural Resources and Energy, which is a part of the Ministry of Economy, Trade and Industry (METI), will be visiting Moscow sometime in July to further explore the possibility of a cooperation between Japan and Russia on the construction of a pipeline and also exploration of the oil field in Eastern Siberia.

   This matter was one of the major subjects that Foreign Minister Kawaguchi discussed with Deputy Prime Minister Viktor Khristenko when she visited Vladivostok over the weekend and had a very long discussion with him. During the course of discussion with the Russian counterparts, Foreign Minister Kawaguchi expressed that Japan is willing to participate in the joint exploration of oil in Eastern Siberia if the Government of Russia decides to construct a pipeline between that oil field and somewhere in the vicinity of Nakhodka, which is called the Pacific route or the Sea of Japan route.

   Q: Of course that participation by Japan in the exploration is contingent or conditional upon Russia giving an assurance that it will construct that pipeline, is it not?

   Mr. Takashima: Not only that it will, but that it will construct the pipeline ahead of the pipeline planned to go to the Chinese oil city of Daqing.

   Q: Do you have any indication or idea of just how firm a commitment Russia has given to build the Chinese pipeline or is it simply a sort of negotiating ploy on their part? In other words, has the Russian side signed a contract at this stage to build a pipeline to the Chinese side? Or is it simply a possible intention?

   Mr. Takashima: My understanding is that the Russian Government has already made the decision to make the oil of the Eastern Siberian oil field available to both the market in the Asia-Pacific area and the People's Republic of China.

   The pipeline to the Chinese city of Daqing will be constructed as a branch of the pipeline between the Eastern Siberia oil field and the port city of Nakhodka. The Chinese line would be shorter and less expensive than the so-called Nakhodka line. Therefore, the Government of Russia is still making a feasibility study on which should be constructed first.

   Q: But they have made a firm commitment or have a firm intention to build a pipeline to Nakhodka, do they not?

   Mr. Takashima: The question is whether it will be constructed ahead of the Chinese branch or later. If it comes later, the Government of Japan believes that it would not be beneficial in economic terms because the pipeline to China would not fully utilize the potential oil production capability in the Eastern Siberian oil field. Furthermore, the oil would not be made available to the Japanese market and henceforth, the Eastern Siberian oil field would lose a big consumer, one who is actually very steady and can make a firm commitment for the purchasing of the oil.

   Q: That consumer being Japan?

   Mr. Takashima: Yes.

   Q: Russia must understand this already. So, why would they appear to prefer the Chinese side?

   Mr. Takashima: I do not think that they have any preference at this moment. Rather, they are making an economic feasibility study, and we are waiting for the conclusion made by the Russian side. Moreover, we understand that the construction of the Pacific route, or Nakhodka route, would depend upon, firstly, the actual production size of the Eastern Siberian oil field and whether it has sufficient capability to fill the big pipeline which would be leading to Nakhodka. It requires more oil than the pipeline bringing it to China only.

   Q: So will Japan's possible aid to Russia take the form of technological and financial aid toward the exploration of the Eastern Siberian oil field?

   Mr. Takashima: It depends on the future negotiation between Japan and Russia. What has been made is a conditional commitment that if the Russians decide to build the pipeline to Nakhodka at the outset, then we would join the whole project and then, we would give financial as well as technical assistance.

   In the case of the Sakhalin project, recently, Japanese private corporations announced to make a US$4.5 billion investment to the Sakhalin-2 project, which would amount in total to a US$10 billion investment. So the same could be applied to the Eastern Siberian oil project if it so develops.

   Q: Those private corporations were from various countries, not just from Japan, right?

   Mr. Takashima: The Japanese did commit to a US$4.5 billion investment.

   Q: When is Director-General Okamoto going to Moscow?

   Mr. Takashima: Some time in July but the date has not been fixed yet.

   Related Information (Japan-Russia Relations)
   
3. Questions concerning possible Iranian oil project

   Q: On the Iranian question, what is the present status of negotiations? As I understand it, the United States is trying to influence the Japanese situation.

   Mr. Takashima: It is true that the Government of Japan is in communication with the Government of the United States on various subjects, including the possible Iranian oil deal.

   However, at the same time, the Government of Japan is very much concerned about the alleged Iranian secret nuclear development program and we are urging the Government of the Islamic Republic of Iran to fully comply with the commitment that they have made with the International Atomic Energy Agency (IAEA) and accept inspections. Furthermore, we are urging them to sign, ratify and implement so-called Additional Protocols of the Nuclear Non-Proliferation Treaty (NPT) which would make the activities of the Iranian Government more transparent in terms of their nuclear development program, so that they can prove that the intention of their nuclear development program is a peaceful one and not for the production of nuclear weapons.

   Q: Will this involve inspections by the United Nations inspectors in the same way that Iraq had to undergo inspections?

   Mr. Takashima: My understanding is that the IAEA is making arrangements or at least discussing with the Government of Iran about sending an inspection team to Iran.

   Q: In the meantime, is everything on hold as far as Japan is concerned regarding the possibility of completing an oil deal?

   Mr. Takashima: The deadline of the negotiation was 30 June and that has passed. We are still waiting for a reply from the Iranian side on the negotiation.

   Related Information (Japan-Iran Relations)