An impending Reagan administration decision on the United States' role in a multimillion-dollar Japanese-Soviet petroleum project could bear on the severely strained economic ties between Japan and the United States, sources here say.
The fate of the Soviet-Japanese deal, into which the Japanese have invested roughly $220 million since 1975, now largely hinges on a decision by President Reagan expected later this month on whether to clear exports of sophisticated exploration and assaying equipment and expertise to Japanese purchasers for the Sakhalin Island project.
Although the $2 million worth of U.S. goods and services involved is small in relation to the total project, failure to get export approval from Washington could cause the Japanese to violate their contract with the Soviets and force 18 private Japanese companies and a government-run energy corporation to surrender their stake in the project, the government and industry sources said.
Such an administration move, the Japanese have asserted, would handicap Japan unfairly, while inflicting little or no damage on the Soviets.
During a 55-minute meeting Friday before the start of the Versailles economic summit, Prime Minister Zenko Suzuki strongly urged Reagan to reconsider the U.S. ban on exports needed for the project, saying that the pertinent U.S. sanctions would cause much greater harm to Japan than to the Soviets.
Reagan, who went to Paris seeking allied support for plans to tighten controls on Western credit to Moscow, responded that the matter would be subject to further study. Foreign Ministry sources here said they expect the White House to announce its decision in the next two weeks. Articles in the Japanese press have suggested the decision could contribute to an underlying feeling among the Japanese that Japan's chorus of critics in the United States seek to punish the country for its economic successes.
Time, for the Japanese at least, is of the essence. Near-Arctic weather conditions make work on the Sakhalin project, located 480 miles north of Japan's northernmost island of Hokkaido, possible only between July and October each year.
"If we don't get the 'go' sign pretty soon," said Tachio Kosaka, an executive at the Sakhalin Oil Development Co. here, "we are in deep trouble because we won't be able to start" operations this year.
The Japanese companies, with the blessing and partial support of the government, entered into the project in 1974 in line with Tokyo's policy of trying to reduce its overwhelming reliance on energy sources in the Middle East. The Japanese agreed to provide the bulk of machinery, expertise and financing needed for exploration and development. In return, the Soviets agreed to repay the Japanese their intial investment plus a margin in lieu of profit out of eventual oil and gas production.
With the contract placing virtually all risks on the Japanese, Kosaka indicated they were relieved by the fact that 12 of 18 test wells dug so far in two separate areas on Sakhalin have located workable deposits of natural gas and, to a considerably lesser extent, crude oil.
The project hit a serious snag, however, when the package of sanctions Washington imposed against Moscow after December's military crackdown in Poland appeared to threaten the supply of vital U.S. goods and services. Only a few companies in the world, all of them located in the United States, are able to provide the technology and expertise at the level of sophistication required to make the Sakhalin project profitable for Japan.
Resistance to the approval of the necessary U.S. licenses, well-placed sources here said, is believed to have come from the U.S. Commerce Department and others in the Reagan administration opposed to the construction of the multibillion-dollar Soviet gas pipeline linking Siberia and Western Europe. The Soviet pipeline and, by extension, the Russo-Japanese project, it is argued, would create a dependence on Soviet-controlled energy sources among key U.S. allies and benefit development of the Soviet economy.