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C O N F I D E N T I A L TOKYO 005023 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 08/31/2016 
TAGS: PREL ENRG JA
SUBJECT: NEW ANRE OIL AND GAS DIVISION DIRECTOR DISCUSSES 
HOT SPOTS 
 
 
Classified By: Charge d'affaires Joseph R. Donovan for reasons 1.4 (b,d 
). 
 
 ¶1. (C) Summary.  On August 29, Shin Hosaka, newly appointed 
director of the Petroleum and Natural Gas Division in the 
Agency for Natural Resources and Energy (ANRE) at the 
Ministry of Economy, Trade and Industry (METI), assessed that 
the situation involving the Azadegan field in Iran was far 
from resolution and still being intensely negotiated.  He was 
perplexed by how India could possibly buy up all of Sahkalin 
I,s natural gas and ship it to India in the form of LNG 
given that there are no plans to convert any of the 
project,s natural gas to LNG.  Hosaka said the Japanese 
government had no idea what to do about the East China Sea 
problem.  He also opined that Minister Nikai was unlikely to 
remain at METI after the LDP Presidential election in 
September but given his connections he likely would receive 
one of the other Cabinet posts or one of the three top LDP 
leadership positions.  End summary 
 
¶2. (SBU) On August 29, Econoff paid a courtesy call on Shin 
Hosaka, new director of ANRE's Petroleum and Natural Gas 
Division.  Hosaka has not served in the Energy Agency since 
1987 when he first joined METI and he professed to be still 
learning his portfolio.  He immediately brought up the 
Azadegan field in Iran but said he knew very little about it 
other than that INPEX was still in negotiations with National 
Iranian Oil Company.  He was uncertain whether those 
negotiations would be completed by the September 22 deadline. 
 Asked about financing for any new agreement, he told us that 
officially INPEX could not look for additional financing 
while negotiations were ongoing but he added that discussions 
were taking place unofficially. 
 
¶3. (SBU) Hosaka said METI was very concerned about new 
Chinese activities in the East China Sea and -- in an 
unguardedly frank moment -- said the government had no idea 
what to do next.  The new Chinese platform lies about 60 
kilometers (approx. 37.5 miles) from the disputed border 
between the two countries' EEZs, but the underlying fields 
are believed to straddle the line.  He noted that Japanese 
officials were concerned the oil and natural gas would be 
siphoned off before they had had an opportunity to exploit 
them.  During the last meeting between Japanese and Chinese 
directors general, they agreed to have experts from both 
countries exchange data to further their understanding of the 
area.  This data exchange is expected to take place at the 
next meeting but the date has yet to be determined. 
 
¶4. (SBU) Hosaka professed bafflement at India,s plan, 
reported in the media, to buy up all of Sahkalin I,s natural 
gas and export it to India in the form of liquefied natural 
gas (LNG).  (Comment:Exxon Mobil, Sahkalin I,s operator, has 
told Econoff that none of the gas from the project would be 
liquefied and because of that Japan has decided not to buy 
any of it, despite its proximity and the fact that the 
consortium behind the project includes two Japanese 
companies.  Without liquefaction, Japan has no way at present 
to purchase and import any of the gas. End Comment.) 
 
¶5. (C) Hosaka had little to say about Prime Minister 
Koizumi,s visit to Central Asia other than to tell us that 
INPEX was building a new facility on the Caspian Sea. 
 
¶6. (C) Asked who METI,s next minister might be, Hosaka had 
no answer but he did comment that Minister Nikai was very 
well connected and close to LDP presidential hopeful Shinzo 
Abe.  Hosaka expected that Nikai would either be appointed to 
Abe,s Cabinet or receive one of the top three LDP leadership 
posts.  (Comment: we have heard similar forecasts from a 
number of senior METI officials recently regarding Nikai,s 
purported closeness to Abe and probable receipt of another 
high post in the next government.  A contrarian senior LDP 
dietmember told us recently, however, that many in the LDP 
see Nikai as exceptionally self-centered and that his 12-year 
departure from the party -- from 1993 to 2005 -- will not be 
rewarded with another ministerial appointment anytime soon. 
End comment.) 
DONOVAN