Location of Sado Island in the Sea of Japan. Map: EIA. Click to enlarge.

METI is outsourcing the test drilling, which is scheduled for April through June, to JX Nippon Oil & Gas Exploration Corp. and Japan Oil, Gas and Metals National Corp.

The survey, which will cost ¥9.8 billion (US$124 million), will cover a seabed area of roughly 135 km² some 30 km southwest of the island of Sado at about 1,100 meters (3,608 feet) of depth. Drilling will go as far as the sandstone bed—about 2,700 meters (8,858 feet) below the seafloor.

Oil and natural gas reserves are yet to be confirmed at this area. The government previously conducted drilling surveys off the coast of Niigata in fiscal 2003 and fiscal 2004, but it was unable to confirm reserves viable for commercialization.

Hopes are being pinned on the new exploration, however, because it will use a research vessel, which has been in service since 2008, that can make more precise surveys.

The Sea of Japan (called the East Sea by South Korea) is bordered by Japan, North Korea, Russia and South Korea.

Japan currently has very limited domestic oil reserves, amounting to 44 million barrels as of January 2012, according to the Oil and Gas Journal (OGJ), down from the 58 million barrels reported by OGJ in 2007, notes the US Energy Information Administration (EIA). Japan’s domestic oil reserves are concentrated primarily along the western coastline (Sea of Japan).

Offshore areas surrounding Japan, such as the East China Sea, also contain oil and gas deposits; however, development of these zones is held up by competing territorial claims with China, EIA says.

Japan thus relies heavily on imports to meet its consumption needs; Japan consumed an estimated 4.5 million barrels per day (bbl/d) of oil in 2011, making it the third-largest petroleum consumer in the world, behind the United States and China. However, oil demand in Japan has declined overall since 2000 by nearly 20% due to a number of factors.