News / Asia

Oil Companies Weigh S. China Sea Exploration Risks

Simone Orendain
MANILA — The disputed South China Sea is believed to hold huge reserves of hydrocarbon resources. Some estimates of potential oil reserves run as high as 213 billion barrels and natural gas at two quadrillion cubic feet - making it one of the world’s richest deposits.

Countries in the region are selling exploration contracts to oil companies interested in tapping into those potentially vast energy resources. Last week, the Philippines put two blocks in the sea up for auction. A day later, China announced it would sell nine blocks in an area Vietnam claims.

But, with China, the Philippines, Vietnam, Taiwan, Malaysia and Brunei involved in territorial disputes about who owns the rights to those hydrocarbon deposits, companies may be reluctant to bid.

Ian Storey, a senior fellow at the Institute of Southeast Asian Studies in Singapore, says with the escalation of tensions in the past year, certain oil companies that bid in the disputed parts of the South China Sea now face the risk of being harassed.

Click to enlargeClick to enlarge
x
Click to enlarge
Click to enlarge
“My guess is, given that the companies that have bid for these blocks are not the major energy producers, then it’s likely that China could pursue more coercive measures against them,” said Storey.

Philippines Energy Department Undersecretary Jay Layug says the blocks recently up for sale are well within Manila’s exclusive economic zone, defined as the ocean up to 370 kilometers from a country’s coast. But China also claims the area based on ancient maps.

Layug says two blocks are disputed by China. They are situated near the contested Reed Bank, where Philippines ships have had run-ins with Chinese vessels.

Since the last Reed Bank incident, the government has taken precautions, Layug says.

“What we have done at the Department of Energy is to make sure that all exploration activities of our service contractors are coordinated with the Philippine Coast Guard and the Department of Defense.”

Although Philippine authorities deemed 20 companies eligible to bid on the remaining three blocks up for auction on July 31, just one company placed a bid on one of the disputed blocks. The other block drew two bids.

Some analysts say the lack of bidding indicates hesitation about the territory’s disputed ownership, Layug rejects that view.

“Certainly, based on our records, we did not receive any hesitation or apprehension from any of those who expressed interest,” he said.

According to Layug, interest in this latest offering was higher than the combined number of bids in the past three calls for contractors.

Kang Wu, a senior advisor on the China market at FACTS Global Energy, which assesses the demand for oil globally, says current tension about the disputes in the South China Sea is a major deterrent to companies, but the hydrocarbons can still be attractive.

“You have so many small drillers which are risk-takers for all kinds of reasons," Wu said. "High risk also means high reward, potentially. So, in the end, it’s every company’s policy, their own sort of methodology of weighing the risk.”

Wu points out some of those risks come with high reward such as when oil companies operated in the oil-rich Persian Gulf that became a combat zone during the Iran-Iraq war of the 1980’s.

Storey says the complication with the South China Sea is that countries have dug in their heels with their claims. And he warns the current trend is “moving in the wrong direction,” meaning that the disputes already underway could worsen in the coming years.

You May Like

Republican Majority in Congress Off to Rough Start

Standoff over Homeland Security funding exposes philosophical, tactical problems within party More

Pakistan Blocks Baloch Activist from US Trip

Human Rights Commission of Pakistan slams Islamabad officials for stopping people from leaving country to attend human rights conference More

Video Muslims Long Thrived in North Carolina Before Students Killed

Idyll shattered February 10, when three Muslim university students living in Chapel Hill were gunned down by a neighbor More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Muslims Long Thrived in N Carolina Before Slaying of 3 Studentsi
X
Jerome Socolovsky
March 05, 2015 9:04 PM
The killings of three Muslim students in North Carolina early last month came as Muslims across the United States have felt under siege, partly as a result of terrorist attacks being committed internationally in the name of their faith. But Muslims have long thrived in university cities in this part of the American South. VOA's Jerome Socolovsky reports.
Video

Video Muslims Long Thrived in N Carolina Before Slaying of 3 Students

The killings of three Muslim students in North Carolina early last month came as Muslims across the United States have felt under siege, partly as a result of terrorist attacks being committed internationally in the name of their faith. But Muslims have long thrived in university cities in this part of the American South. VOA's Jerome Socolovsky reports.
Video

Video Fuel Shortages in Nigeria Threaten Election Campaigns

Nigeria is suffering a gas shortage as the falling oil price has affected the country’s ability to import and distribute refined fuels. Coming just weeks before scheduled March 28 elections, the shortage could have a big impact on the campaign, as Henry Ridgwell reports for VOA.
Video

Video Report: Human Rights in Annexed Crimea Deteriorating

A new report by Freedom House and the Atlantic Council of the United States says the human rights situation in Crimea has deteriorated since the peninsula was annexed by Russia in March of last year. The report says the new authorities in Crimea are discriminating against minorities, suppressing freedom of expression, and forcing residents to assume Russian citizenship or leave. Zlatica Hoke has more.
Video

Video 50 Years Later African-Americans See New Voting Rights Battles Ahead

Thousands of people will gather to mark the 50th anniversary of a historic civil rights march on March 7th in Selma, Alabama. In 1965, dozens of people were seriously injured during the event known as “Bloody Sunday,” after police attacked African-American demonstrators demanding voting rights. VOA’s Chris Simkins introduces us to some civil rights pioneers who are still fighting for voting rights in Alabama more than 50 years later.
Video

Video Craft Brewers Taking Hold in US Beer Market

Since the 1950’s, the U.S. beer industry has been dominated by a handful of huge breweries. But in recent years, the rapid rise of small craft breweries has changed the American market and, arguably, the way people drink beer. VOA’s Jeff Custer reports.
Video

Video Video Claims to Show Shia Forces in Iraq Executing Sunni Boy

A graphic mobile phone video is spreading on the Internet, claiming to show Iraqi forces or Shia militia executing a handcuffed Sunni boy. Experts have yet to verify the video, but already Islamic State followers are publicizing it across social media, playing on deep-rooted sectarian fears. VOA’s Jeff Seldin reports.
Video

Video Ukrainian Authorities Struggle to Secure a Divided Mariupol

Since last month's cease-fire went into effect, shelling around the port city of Mariupol has decreased, but it is thought pro-Russian separatists remain poised to attack. For the city’s authorities, a major challenge is gaining the trust of residents, while at the same time rooting out informants who are passing sensitive information to the rebels. Patrick Wells reports for VOA.
Video

Video Volunteer Gauge-Watchers Help Fine-Tune Weather Science

An observation system called CoCoRaHS is working to improve weather science, thanks to thousands of volunteers across the country who measure precipitation in their own backyards, then share their data through the Internet. VOA's Shelley Schlender reports.
Video

Video NASA Spacecraft Approaches a Dwarf Planet

NASA’s Dawn spacecraft will make history on Friday, March 6, when it becomes the first man-made object to orbit a dwarf planet named Ceres. It is located in the asteroid belt between Mars and Jupiter, almost 500 million kilometers from Earth. Among other objectives, Dawn will try to examine two mysterious bright white spots detected on the planet’s surface. VOA’s George Putic has more.
Video

Video Young Muslims Radicalized Online

Young Muslims are being radicalized ‘in their bedrooms’ through direct contact with Islamic State or ISIL fighters via the Internet, according to terror experts. There are growing concerns that authorities and Internet providers are not doing enough to counter online extremism - which analysts say is spread by a prolific network of online supporters around the world. Henry Ridgwell reports from London.
Video

Video Positive Messaging Transforms Ethiopia's Image

Ethiopia was once known for famine and droughts. Now, headlines more often point to its fast-growing economy and its emergence as a regional peacemaker. How has Addis Ababa changed the narrative? VOA's Marthe van der Wolf reports.
Video

Video Answers Elude Families of MH370 Passengers

For the families on board Malaysia Airlines flight MH370, an airline official’s statement nearly one year ago that the plane had lost contact with air traffic control at 2:40 AM is the only thing that remains confirmed. William Ide reports.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More