Despite being a potentially hydrocarbon-rich region, the prospects of developing oil and gas resources in the South China Sea have often fluctuated with the state of relations among protagonists in the territorial dispute. The latest flare-up in the spat resulted from growing concerns among key players to China’s reclamation program in the region.
The reclamation work – which Rigzone reported earlier citing U.S. estimates provided by The Wall Street Journal – comprised an expansion of artificial reefs in the Spratly Islands to 2,000 acres of land compared to 500 acres in 2014. The island-building program in the South China Sea has become a major regional concern as it transformed “semi-submerged reefs into forward bases with airfields fit for military use” by China.
Bloomberg reported Nov. 22 that the reclamation program was focused primarily on the Spratly islands “within waters that carry about 30 percent of global trade. China is building as many as three airstrips there, prompting concern in the U.S. that its actions will provide it with military bases and risk hindering the free movement of shipping.”
“The island construction work that is creating vast amounts of new acreage … with buildings, harbors and, most importantly, runways appearing in recent months … The bases could have a ‘significant impact on the local balance of power’ by helping bolster the forward presence of Chinese coast guard and navy forces,” Euan Graham, director of the International Security Program at the Lowy Institute in Sydney, Australia told Associated Press in an article published in Indonesian daily Jakarta Post Dec. 6.
China’s territorial claims – based on its “nine dash line” – cover more than 80 percent of regional waters, bringing its boundary near to the shores of rival claimants Brunei, Malaysia, the Philippines and Vietnam.
The United States, while not directly involved in the territorial feud although bound by a defense treaty with the Philippines, has repeatedly emphasized that ships should have freedom of navigation in the waterways. Washington has also urged China to stop land reclamation in the area where $6 trillion in sea-borne trade passes through annually, Singapore’s Business Times reported Nov. 24.
Aside from the rights of passage through regional waters, the availability of hydrocarbon resources and fisheries in the contested area further contributed to the South China Sea imbroglio as sovereignty confers ownership of the embedded petroleum resources. According to the U.S. Energy Information Administration, the South China Sea contains approximately 190 trillion cubic feet of natural gas and approximately 11 billion barrels of oil.
One of the most visible responses to China’s recent reclamation work in the South China Sea was undertaken by the U.S. military.
BBC News reported Oct. 28 that the USS Lassen guided-missile destroyer breached the 12-nautical mile zone around the Subi and Mischief reefs in the Spratly archipelago a day earlier as part of the country’s Freedom of Navigation program to challenge “excessive claims” in the world’s oceans and airspace. China, which requires foreign vessels sailing in these waters to seek Beijing’s clearance, issues warnings over the incident.
Just over a week later on Nov. 8, two U.S. B-52 bombers flew from their airbase in Guam to within 15 nautical miles of artificial features built by China in the South China Sea, prompting Beijing to issued two warning to the U.S. aircraft. China’s Foreign Ministry condemned the acts, saying it was “illegal and provocative.”
While the South China Sea dispute previously centered on China’s relations with two claimants, the Philippines and Vietnam, other regional states like Indonesia and Malaysia now publicly questioned Beijing’s intention over land reclamation on the Spratly Islands as this entrenched Chinese presence near to their borders.
Indonesia’s security chief Luhut Panjaitan indicated that the country might take China to an international court if dialogue over the Natuna islands dispute failed. The matter surfaced after Jakarta noted that Beijing had included parts of the islands within the “nine-dash line”, Reuters reported Nov. 12, as Indonesian Foreign Ministry spokesman Armanatha Nasir stressed “we do not recognize the nine-dash line because it is not in line with … international law.”
Indonesia’s Foreign Ministry has not receive a response from China, but Chinese Foreign Ministry spokesman Hong Lei said Beijing did not dispute Indonesia’s sovereignty over the Natuna Islands although there exists “some maritime disputes”, which he did not elaborate.
Malaysia too appeared concerned about China’s land reclamation in the disputed area, judging from comments of Deputy Prime Minister Ahmad Zahid Hamidi, who noted that an unnamed regional superpower had encroached into its maritime territory by constructing airstrips, jetties and other facilities on three atolls just 84 nautical miles from Sabah state.
The South China Sea dispute was also brought into the international spotlight, much to China’s annoyance. In late October, when the Permanent Court of Arbitration (PCA) in The Hague, Netherlands began hearing the case lodged by the Philippines, which put Beijing under diplomatic and legal scrutiny. Predictably, China has dismissed the PCA intervention.
If the PCA ruling – due in mid-2016 – favors the Philippines, China could face diplomatic pressure, especially at regional meetings such as the Association of Southeast Nations (ASEAN) and the Asia Pacific Economic Cooperation (APEC). Such a pronouncement from the PCA would marks the first time an international court has intervened in the dispute, making it difficult for China to ignore, diplomats and experts told Reuters Dec. 2.
The results of the PCA ruling, Reuters indicated Nov. 24, could encourage other littoral countries in the region – Brunei, Indonesia, Malaysia, Taiwan and Vietnam – to consider launching similar court cases against China.
China’s Foreign Ministry, alluding to the PCA, reiterated Dec. 1 that the Asian economic giant would not accept any decision imposed on it.
“The South China Sea is a classic example of how China thinks about, and is probably succeeding in, rejecting and displacing U.S. primacy in the region, without really risking [major] conflict”, Michael Wesley, a professor in international affairs at the Australian National University told Reuters.
The sovereignty issue in the South China Sea has so far weighed on attempts to fully exploit the potentially rich hydrocarbon resources in the contested waters. Joint development has previously been mooted as a means of tapping oil and gas resources in the region.
Thailand’s former foreign minister Surakiart Sathirathai became the latest to suggest joint development as a means to resolve the South China Sea dispute. He said that the sovereignty issue should be left to future generations to resolve, while affected governments should focus on deriving the economic and commercial advantages from jointly resource development in the overlapping territorial areas, Thai daily The Nation reported Dec. 2.
Thailand is prepared to host a conference of the protagonists as it is not involved in the South China Sea spat. He urged all claimants to be patient and to resolve their differences in accordance with the United Nations Convention on the Law of the Sea.
A five- or six- country partnership to jointly develop the disputed areas for commercial and other benefits should be explored as there would be less nationalistic emotions involved in the process, making it more likely for claimants to accept an agreement to share or lease the resources and related assets, Suriakiart said, as quoted by The Nation.
After all, Malaysia and Thailand succeeded in resolving their overlapping claims to the waters in the southern Gulf of Thailand, where hydrocarbon resources are situated. The two countries signed an agreement in 1979 to jointly explore and develop resources in the 2,800 square mile (7,250 square kilometer) area for mutual and equal benefits, the Malaysia-Thailand Joint Authority (MTJA) stated on its website.
“The MTJA was created as a statutory body under the laws of Malaysia and Thailand in 1991 to assume all rights and responsibilities on behalf of the two Governments to explore and exploit the non-living natural resources, particularly petroleum, in this overlapping area known as the ‘Joint Development Area’ (JDA),” the joint authority elaborated on its role.
Two Production Sharing Contracts (PSCs), comprising Block A-18 and Blocks B-17 and C-19 – all of which were renamed Block B-17-01 in September 2004 – were subsequently awarded to contractors by the MTJA in April 1994 for exploration and development, a move that highlighted the benefits of joint resource development in disputed areas.
石油圈
