TOKYO, March 26: Japan and India have reached a basic agreement on the joint development of natural gas off the Andaman Islands in the Bay of Bengal, a press report said on Saturday. The agreement was reached when Indian Prime Minister Manmohan Singh met last Tuesday with Shinzo Abe, acting secretary general of Japan?s ruling Liberal Democratic Party, the Nihon Keizai Shimbun reported. The two governments will work out details of the project in the run-up to an anticipated visit to India by Japanese Prime Minister Junichiro Koizumi in late April, the leading business daily said in its evening edition. No government officials here were immediately available to confirm the report. Japan plans to start exploring for natural gas on its own in the area possibly in the summer months (June-August) and embark as early as next year on joint exploitation of natural gas led by the private sector, the report said.

The Japanese government will start selecting private contractors for drilling and development of natural gas in the area, the report said.

Natural gas from the field will be supplied to India via pipeline and be exported to Japan as well.

Japan wants to diversify its sources of natural gas as it currently relies on imports for 97 per cent of its needs with Indonesia, Malaysia and Australia being the major suppliers.

The natural gas deal is also aimed at strengthening bilateral ties as Japan?s ruling party hopes to use its strong partnership with India for checking China?s increasing presence in western Asia, the report said.

It noted that China is expanding ties with Myanmar with its troops deployed on Myanmar-held islands north of the Andamans Islands.

The deal also reflects a tie-up between Japan and India in their bids to become permanent members of the United Nations Security Council, the report said.?AFP