News / Asia

China in $5 Billion East China Sea Gas Drive

Woman walks past a poster showing an offshore work platform from of China National Offshore Oil Corp. (CNOOC), outside its Beijing headquarters, Dec. 2012 file photo.
Woman walks past a poster showing an offshore work platform from of China National Offshore Oil Corp. (CNOOC), outside its Beijing headquarters, Dec. 2012 file photo.
Reuters
Chinese state-run oil companies hope to develop seven new gas fields in the East China Sea, possibly siphoning gas from the seabed beneath waters claimed by Japan, a move that could further inflame tensions with Tokyo over the disputed area.
 
Beijing had slowed exploration in the energy-rich East China Sea, one of Asia's biggest security risks due to competing territorial claims, but is now rapidly expanding its hunt for gas, a cheaper and cleaner energy to coal and oil imports.
 
State-run Chinese oil and gas firm CNOOC Ltd. will soon submit for state approval a plan to develop Huangyan phase II and Pingbei, totaling seven new fields, two industry officials with direct knowledge of the projects told Reuters.
 
The approval would bring the total number of fields in what is called the Huangyan project to nine.
 
China is already working on Huangyan I which has two fields approved. The Huangyan project is expected to cost more than 30 billion yuan ($4.9 billion), including 11 production platforms now under construction at Chinese shipyards.
 
If approved, the seven new gas fields would not see a big jump in China's total gas output, supplying only a fraction of last year's 106 billion cubic meters (bcm) and dwarfed by operations in the disputed South China Sea and Bohai Bay off north China. Chinese geologists said gas deposits in the East China Sea region were much smaller and more scattered.
 
The greater issue is the political risk if Beijing approves the new gas fields. Tensions over the East China Sea have escalated this year, with Beijing and Tokyo scrambling fighter jets and ordering patrol ships to shadow each other, raising the fear that a miscalculation could lead to a broader clash.
 
"It's a sign of impatience on the side of the Chinese, stemming from a lack of movement on the Japanese side on the gas fields issue," said Koichi Nakano, associate professor of political science at Sophia University in Tokyo.
 
China and Japan in 2008 agreed to jointly develop hydrocarbons in the area, but Tokyo wishes to settle the issue of maritime boundaries before developing the gas fields.
 
"The question is what will be Japan's response and whether they would be able to talk China out of a unilateral move," said Nakano. "But escalation of tensions leading to a war? I don't think so. The Americans will be watching this situation with grave concern and may play a role of a mediator here."
 
A spokesman for Japanese Prime Minister Shinzo Abe said: "Our understanding is that Japan and China should continue to have dialogue on the issue of joint exploitation of this area, so any unilateral action should not be accepted."
 
Even if the National Development Reform Commission gives approval for the new gas fields, the pace of the development could be determined by China's Foreign Ministry which requests oil companies to seek its approval before every drilling. Such permission may be influenced by tensions with Japan at the time.
 
Major East China Sea expansion

China and Japan disagree on where the maritime boundary between them lies in the East China Sea. Beijing says its activities are in the Chinese territories, while Tokyo is worried the Chinese drilling near the disputed median line would tap into geological structures in its waters.
 
Japan lodged a protest early this month after detecting well construction works at Huangyan I about 26 kms (16 miles) west of the disputed median line. China's foreign ministry rejected the protest as a baseless, saying Beijing had the right to drill in its sovereign waters.
 
U.S. Energy Information Administration estimated in 2012 that the East China Sea has between 1 and 2 trillion cubic feet (28-57 bcm) of proven and probable natural gas reserves, a modest gauge versus estimates by Chinese sources at up to 250 tcf in undiscovered gas resource.
 
If approved, the new gas fields would supply China's manufacturing hub of Zhejiang province, about 400 km (249 miles) away on the east coast, with production slated to start in the fourth quarter of 2015, said the officials.
 
The fields would have a combined annual production capacity of nearly 4 bcm, up from the region's current output of less than 1 bcm, and would account for about 2 percent of China's estimated gas output by the end of 2016.
 
CNOOC and partner Sinopec Corp. are already developing Huangyan I, which was officially approved by the National Development & Reform Commission in June 2012 and is due to start producing gas in September next year. Also on the planning board is Pingbei II, expected to come on line in 2016.
 
CNOOC media officials declined to comment on the new developments and industry sources quoted for the story declined to be identified due to the sensitive nature of the topic.
 
China fast-tracking hunt for gas

China, the world's top energy user, is on a fast track to boost the use of natural gas, with demand for gas forecast to grow more than fourfold by 2030 from the 147 bcm last year. China is the world's fourth biggest gas consumer.
 
China first started pumping gas in early 2006 from the Chunxiao field, part of the massive Xihu trough, but territorial disputes have hindered an industry keen to explore and develop the region, Chinese industry experts said.
 
"China has made compromise, having slowed down the works quite a few years," said a state oil official. "The cards are in the hands of Chinese, as companies are capable of developing [this area] after all the explorations done over the years."
 
China's plan to expand East China Sea operations comes after a near six-year lull in investment in the area, since the 2008 agreement to jointly develop hydrocarbons in the area.
 
"Since 2008 when the two nations reached a consensus for joint development, Japan has barely made any sincere diplomatic moves towards that direction," said Liu Junhong, research fellow at China Institutes of Contemporary International Relations. "It seems that Japan wants to settle the boundaries first before moving to cooperation, which is totally unrealistic."
 
Under the proposed expansion plan, Huangyan II, which is adjacent to the disputed maritime border, would consist of two gas fields. Huangyan I has two fields.
 
Pingbei, an uncontested area located in the western side of the Xihu trough, would have three fields under phase I and another two under phase II.

You May Like

Russia Names US NGO 'Undesirable'

Prosecutors determine activities of National Endowment for Democracy to be 'undesirable,' paving the way for it to be outlawed on Russian territory More

Erdogan Vows 'Anti-Terror' Campaign in Syria, Iraq

Erdogan expressed confidence the 'necessary steps' will be taken by NATO leaders, who will meet Tuesday at Turkey's request More

North Korea: 'No Interest at All' in Nuke Deal

Senior US envoy Sydney Seiler visits Beijing Tuesday for talks on how to revive the stalled six-party nuclear talks with North Korea More

This forum has been closed.
Comment Sorting
Comments
     
by: jonathan huang from: canada
July 18, 2013 1:02 PM
clearly it is a slap into the face to Japan as a punishment of its wrongdoing at Diaoyu island.
What I can say, Japan is really stoopid of thinking it can confront against China. If there is no US support, China can terminate Japan in few days.
In Response

by: Frank from: O. county, USA
July 19, 2013 5:01 AM
No weapons or military forces are required to see China collapses. Air pollution, much bubble money for wasteful investment (shadow banking, military expansion), leaders' corruptions, economic divide, lawless diplomacy, no ethics/manners, contradiction between communism and capitalism, and so on will destruct China; therefore, neither US nor Japan is required to beat Chinese. China is a biggest disliked country in the world.

by: Kamikaze from: Japan
July 18, 2013 3:10 AM
Again, Chinese showed their real characteristics, indicating that Chinese don't understand ethics and manners. Chinese started digging a big hole in the intermediate zone for which Sino-Japan agreed not to develop any gas field without permission from the other party. CPR is struggling with much difficulty in dealing with its bubble economy. CPR has no room to waste money in expanding its investment, because its GDP is going down at high speed.
In Response

by: Henry from: NYC
July 18, 2013 9:24 AM
Just like the real LDP characteristics of a dolt that ignore ethics and common sense. Japan nationalized the little island in the East China Sea. After China and Japan agreed for decades to shelve the dispute of ownership. Japan has and still is struggling with extreme difficulty in dealing with its ever raising national debt, stagnant GDP and deflation. LDP has no room to wiggle in its attempt to revived the economy by QE on steroids. LDP actions are leading Japan in direct confrontation with 4 of the top 5 export destination for Japan.
Riddle me this. How do you justify LDP actions when the Japanese economy is based on exports.
Kamakazi. "The Pot calling the kettle black" is the perfect idiom for any Japanese crying foul!

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
US Calls Fight Against Human Trafficking a Must Wini
X
July 28, 2015 12:21 AM
The United States is promising not to give up its fight against what Secretary of State John Kerry calls the “scourge” of modern slavery. Officials released the country’s annual human trafficking report Monday – a report that’s being met with some criticism. VOA’s National Security correspondent Jeff Seldin has more from the State Department.
Video

Video US Calls Fight Against Human Trafficking a Must Win

The United States is promising not to give up its fight against what Secretary of State John Kerry calls the “scourge” of modern slavery. Officials released the country’s annual human trafficking report Monday – a report that’s being met with some criticism. VOA’s National Security correspondent Jeff Seldin has more from the State Department.
Video

Video Iran Nuclear Pact Wins Few New US Congressional Backers

Later this week, President Barack Obama returns from a trip to Africa to confront a U.S. Congress roiled by the nuclear accord with Iran, an agreement that has received the blessing of the U.N. Security Council. Days of intensive lobbying and testimony by top administration officials have won few new congressional supporters of the pact. VOA’s Michael Bowman reports.
Video

Video Washington DC Underground Streetcar Station to Become Arts Venue

Abandoned more than 50 years ago, the underground streetcar station in Washington D.C.’s historic DuPont Circle district is about to be reborn. The plan calls for turning the spacious underground platforms - once meant to be a transportation hub, - into a unique space for art exhibitions, presentations, concerts and even a film set. Roman Mamonov has more from beneath the streets of the U.S. capital. Joy Wagner narrates his report.
Video

Video Obama Encourages Kenya to Fix Cultures of Corruption, Discrimination

President Barack Obama bid farewell to Kenya Sunday with a major speech at as stadium outside the capital Nairobi where he called on Kenyans to change the cultures of corruption and discrimination that can hold society back. VOA East Africa Correspondent Gabe Joselow has the story.
Video

Video Europe’s Twin Crises Collide in Greece as Migrant Numbers Soar

Greece has replaced Italy as the main gateway for migrants into Europe, with more than 100,000 arrivals in the first six months of 2015. Many want to move further into Europe and escape Greece’s economic crisis, but they face widespread dangers on the journey overland through the Balkans. VOA's Henry Ridgwell reports.
Video

Video Stink Intensifies as Lebanon’s Trash Crisis Continues

After the closure of a major rubbish dump a week ago, the streets of Beirut are filling up with trash. Having failed to draw up a plan B, politicians are struggling to deal with the problem. John Owens has more for VOA from Beirut.
Video

Video Paris Rolls Out Blueprint to Fight Climate Change

A U.N. climate conference in December aims to produce an ambitious agreement to fight heat-trapping greenhouse gases. But many local governments are not waiting, and have drafted their own climate action plans. That’s the case with Paris — which is getting special attention, since it’s hosting the climate summit. Lisa Bryant takes a look for VOA at the transformation of the French capital into an eco-city.
Video

Video Racially Diverse Spider-Man Takes Center Stage

Whether it’s in a comic book or on the big screen, fans have always known the man behind the Spider-Man mask as Peter Parker. But that is changing, at least in the comic book world. Marvel Comics announced that a character called Miles Morales will replace Peter Parker as Spider-Man in a new comic book series. He is half Latino, half African American, and he is quite popular among comic book fans. Correspondent Elizabeth Lee reports from Los Angeles.
Video

Video California Towns Welcome Special Olympics Athletes

Cities and towns in Southern California are greeting thousands of athletes who are arriving for Special Olympics, a competition for people with intellectual disabilities. The games will run from July 25th through August 2nd. VOA's Mike O'Sullivan reports from Pasadena, California, where athletes from Namibia, Singapore and Tanzania got a rousing welcome from local residents.
Video

Video Critics of Japan Defense Policy Focus on Okinawa

In Okinawa, many locals have long complained that Tokyo places an unfair burden on the tiny island by locating most of Japan's U.S. military bases there. As Japan's government moves toward strengthening and expanding the country's defense policies, opponents of those plans are joining local protesters in Okinawa, voicing concern about where the country is headed. VOA’s Brian Padden reports from Okinawa.
Video

Video IS Uses Chemical Weapons in Syrian Attack

Islamic State militants have added a new weapon in their arsenal of fear: chemical weapons. VOA Kurdish service reporter Zana Omer was on the scene within hours of a recent attack in Hasakah, Syria, and has details of the subsequent investigation, in this report narrated by Miguel Amaya.
Video

Video Historic Symbol Is Theme of Vibrant New Show

A new exhibit in Washington is paying tribute to the American flag with a wide and eclectic selection of artwork that uses the historic symbol as its central theme. VOA’s Julie Taboh was at the DC Chamber of Commerce for the show’s opening.
Video

Video Hoverbike Flying Toward Reality

Another long-standing dream of many technological inventors is quickly approaching reality: U.S.- and British-based firms are cooperating in the development of an individual flying platform they call a hoverbike. They say it may revolutionize the concept of flying, including in the U.S. military. VOA’s George Putic reports.
Video

Video As Japan Expands Defense Role, Protests Follow

The Japanese government is moving forward with a controversial security bill that would authorize the military to fight abroad for the first time since World War II. Leaders say it is critical to defend against rising threats from China and North Korea. VOA’s Brian Padden reports from Japan on the big changes ahead, and the opposition they are drawing.
Video

Video Replacing Poppies with Coffee in Myanmar

The remote mountains of Myanmar’s Shan state are home to the second-largest opium-producing region in the world. After a drop during the 2000s, production surged in the past eight years to feed an increasing demand for heroin in China. But farmers are now making less on the crop, and the U.N. is hoping many will make the switch to growing coffee. Daniel de Carteret reports for VOA from Taunggyi.

VOA Blogs