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UNCLAS SECTION 01 OF 06 TOKYO 003134 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA 
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST 
DIVISION; TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS 
OFFICE; SECDEF FOR JCS-J-5/JAPAN, 
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA 
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY 
ADVISOR; CINCPAC FLT/PA/ COMNAVFORJAPAN/PA. 
 
E.O. 12958: N/A 
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA
SUBJECT:  DAILY SUMMARY OF JAPANESE PRESS 06/07/06 
 
INDEX: 
 
(1) Tokyo metro gov't sets up panel on Yokota airbase dual use: 
Gov. Ishihara 
 
(2) Implementation of report by Takenaka-led telecommunications 
and broadcasting panel difficult with no support from Koizumi in 
his final days in office 
 
(3) The challenges of a resources-poor country -- energy security 
(Part 4): China casts blight on Japan's LNG purchase plan from 
Sakhalin 
 
(4) The challenges of a resources-poor country (Chapter 3)-Energy 
security (Part 5): Japan a big LNG power; Close encounters of 
rivals on procurement market 
 
(5) Chinese Embassy puzzled by Metropolitan Police Department's 
request for counselor's appearance for questioning 
 
ARTICLES: 
 
(1) Tokyo metro gov't sets up panel on Yokota airbase dual use: 
Gov. Ishihara 
 
TOKYO SHIMBUN (Page 25) (Full) 
June 7, 2006 
 
The Tokyo metropolitan government has set up a joint panel with 
Tokyo Metropolitan University to study the joint military- 
civilian use of the US Air Force's Yokota base, Tokyo Governor 
Shintaro Ishihara clarified in a policy speech before the Tokyo 
metropolitan assembly in its regular session that opened 
yesterday. 
 
The panel, named the "Committee on the Feasibility of Joint 
Military-Civilian Use," held its first meeting last month. The 
committee, chaired by Hitotsubashi University President Takehiko 
Sugiyama, will study the feasibility of commercial airline flight 
services to and from the airbase and will work out a report 
within the current fiscal year (TN: April 2006 through March 
2007). 
 
Last month, Japan and the United States released a final report 
of their agreement on the planned realignment of US forces in 
Japan. The Japanese and US governments will start their study of 
specific conditions for the dual use of Yokota airbase and will 
wind up their study within 12 months, the final report says. 
 
The metropolitan assembly will be in session until June 21. 
 
(2) Implementation of report by Takenaka-led telecommunications 
and broadcasting panel difficult with no support from Koizumi in 
his final days in office 
 
TOKYO SHIMBUN (Page 3) (Abridged) 
June 7, 2006 
 
An advisory panel to Internal Affairs and Communications Minister 
Heizo Takenaka produced its final report yesterday on future 
options for telecommunications and broadcasting, outlining ways 
to realign NHK and NTT, with the abolition of its holding company 
and the separation of equity links in mind. The report aims for 
 
TOKYO 00003134  002 OF 006 
 
 
advancing a fusion of telecommunications and broadcasting. But it 
undeniably lacks punch due to political pressure against the 
backdrop of growing industrial opposition to swift reform. The 
Liberal Democratic Party has also produced its own plan. The fate 
of Takenaka's last reform effort under the Koizumi administration 
remains extremely vague. 
 
Greater competitiveness 
 
Before kicking off discussion on a fusion of telecommunications 
and broadcasting, Takenaka lamented, "Why can't we watch live 
television broadcasting on the Internet? Why is Japan devoid of 
decent television broadcasters that can send out messages 
overseas, like America's CNN and Britain's BBC?" 
 
Fearing a loss of the industrial edge in the near future due to 
shrinking population resulting from the dropping birthrate, 
Takenaka is determined to enhance Japan's capability to produce 
quality contents in order for Japan to remain competitive in the 
world. 
 
The final report proposes abolishing the holding company of NTT, 
which remains highly monopolistic in infrastructure. It also 
calls for a review of the legislative system to pave the way for 
production companies that tend to rely on television stations to 
become independent. 
 
A lack of punch 
 
The council discussion gradually lost zeal. 
 
Initially, an idea surfaced to integrate all government agencies 
responsible for telecommunications and broadcasting, such as the 
Internal Affairs and Communications Ministry and the Economy, 
Trade and Industry Ministry, into one office. But such an idea 
failed to make the final report. The idea of partially 
privatizing NHK also disappeared with Prime Minister Junichiro 
Koizumi's order to reform the public broadcaster without 
privatizing it. 
 
The Livedoor scandal played a certain role in Koizumi's decision 
to reject NHK privatization. Koizumi's from-the-public-sector-to- 
the-private-sector policy course and Takenaka, the champion of 
market forces, drew fierce fire following the Livedoor scandal. 
The industries also resorted to the telecom and broadcasting 
policy cliques in the LDP to turn the tables. 
 
Takenaka intended to bulldoze the council's draft plan through 
the Prime Minister's Official Residence on the strength of 
Koizumi's leadership despite strong opposition from the LDP 
policy cliques and bureaucrats. But that did not work this time 
around. 
 
A counter-plan 
 
An LDP panel chaired by Toranosuke Katayama also produced a 
counter-plan on June 2. The LDP plan partially overlaps with the 
Takenaka report, such as enhancing NHK's international 
broadcasting. 
 
But the LDP plan remains cautious about realigning NTT. It also 
calls for a thorough discussion on the propriety of IP multicast 
broadcasting apparently in consideration of commercial television 
 
TOKYO 00003134  003 OF 006 
 
 
networks, which regard Internet-based nationwide broadcasting as 
a threat. 
 
After coordinating views with the LDP, Takenaka aims to reflect 
plans in the government's set of "big-boned" economic and fiscal 
policy guidelines. The LDP intends to take the leadership in the 
process, one saying: "There is no need for us to make 
concessions." Takenaka might find himself in a disadvantageous 
position in the closing days of the Koizumi administration on the 
wane. 
 
(3) The challenges of a resources-poor country -- energy security 
(Part 4): China casts blight on Japan's LNG purchase plan from 
Sakhalin 
 
SANKEI (Page 3) (Full) 
June 4, 2006 
 
It was some 40 kilometers northward from Cape Soya in Hokkaido. 
It was Russia's Sakhalin Oblast, a far north island where the 
temperature in midwinter drops to 30 degrees below zero. Ample 
energy resources not yet developed sit beneath the ground there. 
 
One hour's drive from Sakhalin's capital, Yuzhno-Sakhalinsk, 
brings you to a coastal area where you can see an extensive site 
of 520 hectares along the coast. A liquefied natural gas (LNG) 
plant is under construction there. It will become one of the 
largest such plants in the world. This project is called Sakhalin 
¶2. The project will begin the supply of LNG in the summer of 
¶2008. The buyers of nearly 50% of the production at the plant 
will be Japanese electric power and gas companies. Their annual 
purchase volume will be more than 4 million tons, approximately 
10% of Japan's demand for LNG. 
 
In Sakhalin, nine energy development projects, including Sakhalin 
2, are afloat. They are drawing close attention of energy 
officials across the world. Sakhalin's major industries were 
fishery and forestry in the past, but now it is in an "energy 
rush." Luxury homes and hotels are being constructed there. 
 
The southern part of Sakhalin was once Japan's territory. 
Sakhalin has close links to Japan. In order to tap resources, 
Japan concluded a contract with the former Soviet government on 
development of resources in 1975 and advanced the development as 
a national project. Japan invested more than 30 billion yen out 
of the state coffers in the development project through loans or 
financing by, for instance, the former Japan National Oil 
Corporation, and discovered oil and gas fields. This project was 
followed by the Sakhalin 1 project. 
 
Sakhalin 1 launched the commercial production of oil and natural 
gas last October. This project is led by ExxonMobil, one of the 
US oil majors, and joined by Japanese companies, such as Itochu 
Corp., Marubeni Corp., and Japex. Sakhalin 1 initially had a plan 
to supply natural gas to Japan, which is geographically close to 
Sakhalin. But there is no clear outlook at present for the plan 
to be put into practice. 
 
A major obstacle is how to transport the gas to Japan. According 
to the Sakhalin 1 project's plan, gas will be pipelined to Japan, 
which is said to be the most economical of all options. Japan is 
the largest natural gas importer, which imports more than 40% of 
the total LNG sold on the world markets. LNG is transportable by 
 
TOKYO 00003134  004 OF 006 
 
 
ship to a power plant on a coastal area, but transportation via 
the pipeline is not adaptable. A procurement official at an 
electric power company is cautious about buying gas from Sakhalin 
1: "If they lay a pipeline to our power plant, we will consider 
the purchase of gas from them." 
 
"Could you allow us to supply gas first to China?" Exxon said 
this to Japanese electric power companies, out of irritation. It 
then began gas supply talks with China. But the negotiations have 
run into difficulties, leaving open who will buy the gas. 
 
A fresh move was observed this past April over the Sakhalin 
projects. It was a secret visit to Japan by Russia's state-run 
oil company Rosneft President Sergei Bogdanchikov. Rosneft, whose 
shares are all in the possession of the Russian government, plans 
to go public. Bogdanchikov is looking for underwriters in 
traveling across the world. Reportedly he visited several banking 
institutions in Japan. 
 
"That is a manifestation of Russia emphasizing the Japanese 
market," explained Sumitomo Corp. Special Advisor Kosaburo 
Morinaka, chair of the Far East Department of the Japan Business 
Federation (Nippon Keidanren), referring to Bogdanchikov's visit 
to Japan. Rosneft has been concerned with the development of 
resources under Sakhalin 1. If Morimoto were correct, Exxon 
should again approach Japan. A rumor flying among concerned 
officials is that Sakhalin 1 and Sakhalin 2 will be integrated to 
make it easy for Japan to buy the natural gas. 
 
The Japanese government is a stockholder of Sakhalin Oil and Gas 
Development Company (SODECO), which has participated in the 
Sakhalin 1 project, as the government took over the investment by 
the former Japan National Oil Corporation in Sakhalin 1. The 
participants in the project can share profits in accordance with 
their rights to the project whoever will buy the gas from the 
project. But if the gas produced by the project were to be sold 
to China, Japan's attitude that it has participated in the 
project as a national project would be called into question. 
 
(4) The challenges of a resources-poor country (Chapter 3)-Energy 
security (Part 5): Japan a big LNG power; Close encounters of 
rivals on procurement market 
 
SANKEI (Page 3) (Abridged) 
June 5, 2006 
 
In the summer of 2004, Chiyoda Corporation President and CEO 
Nobuo Seki visited Doha, the capital city of Qatar, where Seki 
met with an executive of Qatar Liquefied Gas Co., Ltd., or 
Qatargas. This Qatari executive whispered into Seki's ear, "The 
successful bidder of this plant will take all other projects." 
 
In those days, Chiyoda Corp. was aiming for the world's largest 
liquefied natural gas (LNG) project in Qatar, which planned an 
annual output of 15 million tons. It was a big business chance 
for 400 billion yen. According to the Qatargas executive, the 
winner of this LNG project was expected to become an exclusive 
contractor on all other projects following the LNG project. It 
was an all-or-nothing challenge. "We've got to win." With this, 
Makoto Okubo, Chiyoda Corp. general manager for the Middle East 
region, went on negotiating tenaciously with his Qatari business 
counterparts on the basis of explanatory materials piled up to 
the height of several meters. 
 
TOKYO 00003134  005 OF 006 
 
 
 
There was a response. In the 1990s, Qatar had its first LNG plant 
built. Chiyoda Corp. was the contractor on that LNG plant project 
and a "reliable partner" endorsed by its technical know-how and 
steadiness. 
 
"We'll bring the letter of intent." The good news came to Chiyoda 
Corp. CEO Seki and GM Okubo in late 2004, a half year after the 
Qatari executive whispered into Seki's ear. 
 
In the 1990s and afterward, Chiyoda Corp. used to undertake a 50% 
share on the global market of LNG plant construction projects, 
including foreign joint ventures, with JGC Corporation winning a 
30% share. Japanese manufacturers know how to best meet the 
characteristics of gasses produced overseas and how to cool 
gasses in large quantities to liquids. Foreign companies cannot 
easily vie with the technologies of Japanese plant exporters. 
 
Qatar, a small country of the same size as Akita Prefecture, has 
the world's third largest amount of natural gas reserves. In 
2010, Qatar will increase its annual LNG production capacity from 
the level of 6 million tons in the 1990s to 77 million tons, 
aiming for No.1 in the world. In Qatar, Chiyoda Corp. became a 
successful bidder of three plant projects in 2005, following its 
successful bids in 2004. Its contracts in Qatar totaled 1.35 
trillion yen, an unprecedented scale in the industry. It was a 
fruit of winning the Qatari government's all-out confidence. 
 
Plant construction is now going on at a high pitch in the 
northern Qatari industrial complex city of Ras Laffan, where 
Chiyoda Corp.'s engineers are spearheading 25,000 on-site workers 
from about 30 countries to build production lines with an overall 
length of more than 200 meters. "No one but Chiyoda can build 
high-quality plants on time," Okubo said proudly. 
 
Japan is the world's largest LNG importer accounting for 40% of 
the world's LNG procurement. The United States and European 
countries receive natural gas supplies through pipelines from 
natural gas fields. Japan, however, is far from natural gas 
fields, so Japan has to ship liquefied gasses for its city gas 
users and power plants. Japan, which has high technologies for 
plant construction and has much demand, is literally a big LNG 
power. 
 
However, a Japanese developer of natural resources was recently 
shocked at the words of a high-ranking official of the Qatari 
government. "Three years ago," this Qatari official told the 
Japanese developer, "we needed Japanese cooperation." The 
official added, "But now, there are many inquiries from other 
foreign companies." 
 
Meanwhile, India began two years ago to import LNGs against the 
backdrop of its rapidly increasing demand for energy resources. 
China also started in May to import LNGs. The United States will 
increase its annual LNG imports from the current level of several 
million tons to 100 million tons in 2025. Kang Wu, a senior 
fellow at the East-West Center, a US think tank, warns: "The 
United States may become a rival of Japan in LNG acquisition." 
 
The LNG procurement market is no longer for Japan only and is now 
a main stage to scramble for natural resources. Can Japan remain 
a big LNG power? With the advent of powerful rivals, Japan's LNG 
procurement strategy is at a crossroads. 
 
TOKYO 00003134  006 OF 006 
 
 
 
(5) Chinese Embassy puzzled by Metropolitan Police Department's 
request for counselor's appearance for questioning 
 
SENTAKU (Page 98) (Abridged slightly) 
June 2006 
 
The arrest of Chinese Business Consultancy President Zhang Jian 
by the Metropolitan Police Department Public Safety Bureau on 
suspicion of helping another Chinese man obtain residential 
status by lying to immigration authorities has sent shockwaves 
through the Chinese Embassy in Tokyo. 
 
Zhang has often entertained Counselor Teng Anjun, who heads the 
Consular Section, on the golf course and at posh restaurants and 
bars on holidays. In addition, a law center, the predecessor of 
Chinese Business Consultancy, was located in the Chinese Embassy. 
The Public Safety Bureau twice asked Counselor Teng to appear for 
questioning. 
 
Teng is one of six persons who entered Soka University as the 
first formal group of Chinese exchange students after Japan 
normalized diplomatic relations with China. Cheng Yonghua, who 
served until recently as minister to Japan, is also one of the 
six former students. Cheng, who did not get along well with 
Ambassador Wang Yi, is now ambassador to Malaysia. 
 
The Public Safety Bureau's request for Teng's appearance has 
stirred a variety of conjectures, such as that it is intended to 
check the New Komeito's tendency to drift away from the Liberal 
Democratic Party, or that it reflects the National Police 
Agency's intention to track the movements of Counselor Li Dong -- 
not Teng -- who is also one of the six former Chinese students 
and a former executive member of the Chinese Communist Party 
International Liaison Department. Learning of such conjectures 
through Soka Gakkai, the Chinese Embassy is having a hard time 
determining their authenticity. 
 
At least for the time being, public security authorities aim to 
find out the actual situation of the Japan-China council 
promoting China's peaceful reunification, for which Zhang Jian 
serves as vice chairman. Authorities are watching closely the 
organization as a new body to work out maneuvers against Taiwan 
in place of the Chinese Party United Front Department. 
 
SCHIEFFER