The two companies said they plan to dig a 1,000 metre well - the deepest in Japan -by using semi-submersible drilling technology, which will pump crude oil and gas to an offshore facility. Production is slated to start as early as 2008.

Japan Energy and Idemitsu said the operations will be profitable if the equivalent of at least several hundred thousand to several million cubic metres in natural gas is produced.

They will start building facilities as soon as they determine the project's profitability and said they aim to gain expertise in deep-sea oil drilling for application in other regions.