If no agreement is reached in talks next week with China on natural gas development in the East China Sea, Japan is prepared to ensure the safety of Teikoku Oil Co. employees and protect the Japanese company’s right to drill in disputed waters, Shoichi Nakagawa, minister of economy, trade and industry, said Wednesday.

“The final decision about whether or not to drill is up to (Teikoku),” Nakagawa said in a news conference following Prime Minister Junichiro Koizumi’s re-election. “But should the private company decide to drill, Japan will do its duty by it.”

The two sides are embroiled in a bitter dispute about the tapping of natural resources in the East China Sea, where the two sides seek to stake territorial claims ahead of a United Nations ruling, due by May 2009, on where the demarcation line between the two countries should be.

Japan earlier in the day lodged a protest after China began extracting natural resources in the Tianwaitian field, a few kilometers on China’s side of the line Japan claims divides the two countries’ zones. Japan claims Chinese drilling will deplete resources on Japan’s side.

Beijing, for its part, protested in July Tokyo’s decision to grant Teikoku Oil drilling rights in three areas on Japan’s side of the line.

“If we only protest, it’s just a repeat of what we’ve been doing for two years,” Nakagawa said.

Senior officials from the two countries will search for common ground in talks to be held toward the end of next week in Tokyo, Foreign Minister Nobutaka Machimura told a separate news conference in the evening.

“We request that China cease” development and production, he said. “We must search for a realistic solution, such as how to make joint production possible.”

Experts say Teikoku Oil would have to sell any natural gas or oil it extracts to China, as shipping to Japan would be prohibitively expensive without a pipeline.

“But what’s at stake is more than short-term cost-effectiveness,” a METI official said. “There are other resources in the seabed, and we don’t want to be in a weaker bargaining position in the future.”

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