China Decides that South China Sea Oil is a National Asset

By John Daly, a non-resident scholar at the Central Asia-Caucasus Institute at Johns Hopkins University’s Paul H. Nitze School of Advanced International Studies and chief analyst at OilPrice. Cross posted from OilPrice

While the Western press is fixated on both recent North Korean nuclear tests and Beijing’s recent skirmishes with Japan over the Senkaku (“Diaoyu” in Chinese) islands, other maritime issues have developed further south, where China is involved in sovereignty disputes over the Spratly islands’ 750 islands, islets, atolls, cays and outcroppings with the Philippines, Taiwan, Vietnam, Malaysia and Brunei.

Beijing is bolstering its claims with ancient Chinese maps, despite the 2002 “Declaration on the Conduct of Parties in the South China Sea,” designed to ease tensions over the archipelago.

Now, no less an authority than the U.S. government’s Energy Information Agency has waded into the dispute over the potential riches at stake.

The EIA’s updated “South China Sea” brief, issued on 7 February, after noting, “The South China Sea is a critical world trade route and a potential source of hydrocarbons, particularly natural gas, with competing claims of ownership over the sea and its resources,” goes on to add, “EIA estimates the South China Sea contains approximately 11 billion barrels of oil and 190 trillion cubic feet of natural gas in proved and probable reserves.”

The silver lining here?

“Conventional hydrocarbons mostly reside in undisputed territory.”

Searching for yet more optimism, the EIA estimates are far below those of the U.S. Geological Survey, which calculates that the South China Sea may contain roughly 28 billion barrels of oil, even as the Chinese government calculates that the South China Sea region contains nearly 200 billion barrels of oil.

No one knows for sure, especially as the Chinese Navy harasses and chases off foreign survey vessels.

What is certain is that the EIA’s modest observations will only strengthen the multinational South China Sea disputes, as even a modest 11 billion barrels of oil, as opposed to 28 or even 200 billion barrels, is still hard to walk away from.

Throwing yet more oil on troubled waters, the EIA reported that three months ago the Chinese National Offshore Oil Company (CNOOC) estimated the area holds around 125 billion barrels of oil and 500 trillion cubic feet of natural gas in undiscovered resources, although independent studies have not confirmed this figure.”

Will negotiations save the day? The EIA reported, “Rather than attempting unilateral exploration and production (E&P) activities in disputed territory, several countries have opted to cooperate in the South China Sea. Malaysia and Brunei settled territorial disputes in 2009 and have partnered to explore offshore Brunei waters. Thailand and Vietnam have jointly developed areas of the Gulf of Thailand, despite ongoing territorial disputes. These success cases contrast with the parts of the South China Sea contested by multiple parties, which have seen little energy development.”

Down the road, besides the Spratlys, China occupies some of the South China Sea’s Paracel Islands, which it seized in 1974 but are still claimed by Vietnam and Taiwan, along with a territorial dispute with Indonesia over the South China Sea’s 272-island Natuna archipelago, 150 miles northwest of Borneo.

The future?

The EIA, hardly alarmist, concludes, “The South China Sea historically has been a source of conflict among its states.”

On 11 February the Filipino Department of Foreign Affairs Assistant Secretary Raul Hernandez, told reporters that Manila hoped that China would make an official response to the arbitration case it filed before a tribunal under the 1982 United Nations Convention on the Law of the Sea, before maintaining that the case would move forward should China refuse to do so, remarking, “We are hoping that by the deadline, they would be able to officially notify us and reply to our notification that we have submitted to them earlier.” By invoking UNCLOS, the Philippines hauled China to the UN arbitral tribunal in the hope of compelling Beijing to respect Manila’s 200-mile UNCLOS guaranteed maritime exclusive economic zone (EEZ) and adjacent continental shelf.

Bolstering Manila’s determination is the fact that the U.S. is negotiating to return to its former military bases in the Philippines at Clark airfield and Subic Bay.

With billions of barrels of oil at stake, gentlemen – place your bets.

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  1. Ant

    This just in. The Turks and the Mogolians just discovered some old maps and are planning to take back whats rightfully theirs including 2/3 of China.

    1. Rufus T. Firefly, Jr.

      This just in: various Native American tribes produced maps demonstrating that, historically, the entire USA belongs to them. But this sounds like a conspiracy theory to me…


      1. ambrit

        This just in: Spirit Cave Man asks Immigration and Naturalization to ‘deport’ illegal immigrants for ‘moral terpritude.’ (Said ‘illegal immigrants’ being Asiatic Wanderers, European Dissidents, and various “masses yearning to be free.”)

        1. Susan the other

          This just in from a public service announcement released this morning by Koch industries: If there is that much oil in and around the South China Sea, why on earth should we continue with KXL to transport tar sands?

  2. anyone

    Watching the Chinese mature into the new Amerika (i.e., a budding militaristic capitalist bully) kinda gives one the warm fuzzies all over. Too bad they arrived a century late to the cheap oil party. The drunken after party, as a bunch of oil-addicted souses lob threats and worse at each other over the scraps, should be interesting to watch, to say the least.

    1. Gaylord

      China is also developing solar and wind energy and mass transit at a feverish pace. The U.S. could learn a lesson or two from them.

  3. Max424

    “… gentlemen – place your bets.”

    My bets on Player -B-, China. And why wouldn’t it be? After all, -B’s- chip stack dwarfs all the other participants chip stacks combined/times many factors unknown.

    Consider former Player -A-, that poor penniless bastard the United States. Player -A- has no a chip stack, having gone busted. In fact, -A- can’t even get back into the game via a rebuy, it’s wallet is so self admittedly empty.

    Yet former Player -A- still sits at the table, despite its chipless status. Why? No one can say for sure. Some believe that under those famously hooded eyes, -A- is keenly observing the chip stack leader, hoping to ascertain its ancient winning formula, others, that Player -A- is no longer capable of keen observation, that what it actually doing through those slitted peepers, is glaring at Player -B- with muy mal intent, while showing simultaneous signs of having gone, mucho delusional.

    On one thing, though, there is some general agreement, when -A- periodically threatens to tip over the table and smash everybody’s face in, it ain’t no joke. Former Player -A- is decidedly one mean hombre, and all the more so, now that he’s broke.

  4. MG

    White Anglo’s invaded, invading Middle East and N. Africa for resources, China has a more valid claim on this region than they have.

    1. Proof

      More reasons? Don’t just keep saying and stop bullying tactics against neighbors. Show real documents and proofs. This is 21st century and feudalistic nationalism does not work

  5. Bob

    Many historical maps unveiled that Hainam island is the southen most of China. These map were published and printed by China to claim their territory at the time. After these maps have surfaced arround the world from many people and organization which collect maps, China prints a new map version on its passports and globes to include the West Philippine Sea as its territory.

  6. alex

    “Beijing is bolstering its claims with ancient Chinese maps”

    In other news Rome is bolstering it’s claim to England with ancient maps.

  7. Mark

    In its 300 year planning, one nation (name not yet released) decides to issue maps that include the whole world as its territory and hide it in many places which can be found later on. This move will boster its claim in the future as these maps will become historical artifacts as time past and when people found it.

  8. ltr

    “No one knows for sure, especially as the Chinese Navy harasses and chases off foreign survey vessels.”

    Duh, imagine the Chinese wanting to oversee access to the South China Sea which is sort of like the United States wanting to control the Gulf of Mexico.

  9. the threat industry

    “Philippines hauled China to the UN arbitral tribunal.” You in the outside world might view this as pacific settlement of disputes, the moral and legal imperative for all UN member countries, routine maintenance for lawful comity and further proof that the international legal system works.

    But once you are privy to state secrets in the Neocon ivory towers, you would quickly learn that this is another one of those threats that require 600 more aircraft carriers and another 100 foreign bases with retarded GIs raping host-country kids, another legally void invocation of self-defense and a BF naval war of aggression for all the green recruits who missed Operation Praying Mantis.

    There’s a threat to the peace here, but it’s not peaceful resource competition. It’s the Beltway, Earth’s asshole, obtruding military mobilization in the Philippines.

  10. Gaylord

    The Chinese will have a big problem if the world’s oil dependency continues: (from Huffington Post)

    Shanghai’s proximity to the water has allowed for economic prosperity, but also presents future challenges as sea levels rise. According to ClimateWire, the city has already “[poured] billions of dollars into rebuilding infrastructure to protect against potential floods.”

    They explain, “the city’s biggest concern remains the slow, steadily mounting threat that comes from sea level rise. Higher tides are washing away the precious delta soil upon which the city’s foundations are built, and water supplies are becoming more tainted as seawater intrudes more deeply into the fresh water of the Yangtze.”

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