Page last updated at 04:32 GMT, Monday, 16 June 2008 05:32 UK

China and Japan 'near gas deal'

File image of a Chinese gas drilling rig in the East China Sea
China and Japan have held several rounds of talks over the dispute

Japan and China are close to a deal that would ease a long-running dispute over gas fields in the East China Sea, reports from Japan say.

The two sides were "working out final details", top government spokesman Nobutaka Machimura said.

His comments came after Japanese media said an agreement on joint exploration of disputed areas had been reached.

China will allow Japan to invest in drilling projects in return for a share of the profits, Kyodo News agency said.

The dispute has been an ongoing irritant in China and Japan's often tense relationship.

But ties have improved in recent months and in May Chinese President Hu Jintao visited Tokyo for talks with his Japanese counterpart, Yasuo Fukuda.

Under the deal, China and Japan would conduct joint exploration of several gas fields in offshore areas each side claims, Kyodo said, citing government sources.

The deal would allow undersea oil and gas resources to be accessed while putting to one side the wider issue of overlapping territorial claims, the agency said.

An official announcement could come as early as this week, the agency quoted the sources as saying.

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