The much-anticipated announcement of an agreement between China and Japan to jointly develop the contested offshore natural gas fields in the East China Sea was issued on Wednesday by the foreign ministries of the two countries.

Under the deal, the two sides agree to allow China to take the lead role in the exploration of at least one of the two main potential sites, with Japanese companies investing in and sharing the profits, the New York Times writes.

According to a statement from China's Foreign Ministry spokeswoman Jiang Yu, the first step in the cooperation will consist of conducting joint exploration in an area chosen by both and continuing consultations on expanding the exploration to other areas, Xinhua writes.

Japanese firms can join the exploration in accordance with China's laws on cooperation with foreign firms to explore offshore petroleum resources, Xinhua says.

Negotiations on the development of the gas fields were launched four years ago, but they hit a stalemate during Premier Junichiro Koizumi's 2001-2005 tenure, partly because of his visits to a war shrine perceived by Beijing as a symbol of Tokyo's past military aggression. In addition, China commenced drilling in one of the contested gas fields without Japan's consent, causing further friction between the two nations.

Although the joint development deal does not provide a solution to the countries' conflicting territorial claims in the East China Sea, it is a significant step towards enhancing bilateral ties in parallel with their growing economic interaction.

Jiang called the agreement "an important step" to realize the common goals of the two countries to make the East China Sea "a sea of peace, cooperation and friendship," Xinhua writes.

The agreement is a “welcome development in Japan-China relations and a specific achievement in our strategic relations," Xinhua quotes Japan’s Foreign Minister Masahiko Komura as saying.

Despite all the attention that the gas fields have aroused, the reserves under the East China Sea are estimated to be relatively small, equaling only to about 93 million barrels of oil, according to the New York Times.

Detailed talks will be held between the two countries before the signing of a formal treaty.