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

Elusive Deal With Iran Could Yield Foreign Policy Legacy for Obama

A new Iranian leader -- and a strategic shift by the United States -- opens narrow window for nuclear agreement with Tehran More

Column: Saudi-Iran Meeting Could Boost Fight Against Islamic State

The fact that Iranians and Saudis are talking again does not guarantee a breakthrough, but it could make it easier to build a broad coalition against IS More

Thai Ruler Gives Top Cabinet Posts to Junta Inner Circle

Thailand's army chief has kept an iron grip on power as he extends the government, hand-picking an interim parliament that subsequently nominated him prime minister 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.
West Africa Ebola Vaccine Trials Possible by Early 2015i
X
Carol Pearson
August 30, 2014 7:14 PM
A U.S. health agency is speeding up clinical trials of a possible vaccine against the deadly Ebola virus that so far has killed more than 1,500 people in West Africa. If successful, the next step would be a larger trial in countries where the outbreak is occurring. VOA's Carol Pearson has more.
Video

Video West Africa Ebola Vaccine Trials Possible by Early 2015

A U.S. health agency is speeding up clinical trials of a possible vaccine against the deadly Ebola virus that so far has killed more than 1,500 people in West Africa. If successful, the next step would be a larger trial in countries where the outbreak is occurring. VOA's Carol Pearson has more.
Video

Video Survivors Commemorate 70th Anniversary of Nazi Liquidation of Jewish Ghetto

When the German Nazi army occupied the Polish city of Lodz in 1939, it marked the beginning of a long nightmare for the Jewish community that once made up one third of the population. Roughly 200,000 people were forced into the Lodz Ghetto. Less than 7,000 survived. As VOA’s Kane Farabaugh reports, some survivors gathered in Chicago on the 70th anniversary of the liquidation of the Lodz Ghetto to remember those who suffered at the hands of the Nazi regime.
Video

Video Cost to Raise Child in US Continues to Rise

The cost of raising a child in the United States continues to rise. In its latest annual report, the U.S. Department of Agriculture says middle income families with a child born in 2013 can expect to spend more than $240,000 before that child turns 18. And sending that child to college more than doubles that amount. VOA’s Deborah Block visited with a couple with one child in Alexandria, Virginia, to learn if the report reflects their lifestyle.
Video

Video Chaotic Afghan Vote Recount Threatens Nation’s Future

Afghanistan’s troubled presidential election continues to be rocked by turmoil as an audit of the ballots drags on. The U.N. says the recount will not be completed before September 10. Observers say repeated disputes and delays are threatening the orderly transfer of power and could have dangerous consequences. VOA correspondent Meredith Buel reports.
Video

Video Ukraine Battles Pro-Russia Rebel Assault

After NATO concluded an emergency meeting to discuss the crisis in eastern Ukraine, the country is struggling to contain heavy fighting near the strategic port of Mariupol, on the Azov Sea. Separatist rebels are trying to capture the city, allegedly with Russian military help, and Ukraine's defense forces are digging in. VOA's Daniel Schearf spoke with analysts about what lies ahead for Ukraine.
Video

Video Growing Business Offers Paint with a Twist of Wine

Two New Orleans area women started a small business seven years ago with one thing in mind: to help their neighbors relieve the stress of coping with a hurricane's aftermath. Today their business, which pairs painting and a little bit of wine, has become one of the fastest growing franchises across the U.S. VOA’s June Soh met the entrepreneurs at their newest franchise location in the Washington suburbs.
Video

Video Ebola Vaccine Trials To Begin Next Week

The National Institutes of Health says it is launching early stage trials of a vaccine to prevent the Ebola virus, which has infected or killed thousands of people across West Africa. The World Health Organization says Ebola could infect more than 20,000 people across the region by the time the outbreak is over. The epidemic has health experts and governments scrambling to prevent more people from becoming infected. Zlatica Hoke has more.
Video

Video Asian Bacteria Threatens Florida Orange Trees

Florida's citrus fruit industry is facing a serious threat from a bacteria carried by the Asian insect called psyllid. The widespread infestation again highlights the danger of transferring non-native species to American soil. VOA’s George Putic reports.
Video

Video Aging Will Reduce Economic Growth Worldwide in Coming Decades

The world is getting older, fast. And as more people retire each year, fewer working-age people will be there to replace them. Bond rating agency Moody’s says that will lead to a decline in household savings; reducing global investments - which in turn, will lead to slower economic growth around the world. But experts say it’s not too late to mitigate the economic impact of the world’s aging populations. Mil Arcega has more.
Video

Video Is West Doing Enough to Tackle Islamic State?

U.S. President Barack Obama has ruled out sending ground troops to Iraq to fight militants of the so-called Islamic State, or ISIS, despite officials in Washington describing the extremist group as the biggest threat the United States has faced in years. Henry Ridgwell reports from London on the growing uncertainty over whether the West’s response to ISIS will be enough to defeat the terrorist threat.
Video

Video Coalition to Fight Islamic State Could Reward Assad

The United States along with European and Mideast allies are considering a broader assault against Islamic State fighters who have spread from Syria into Iraq and risk further destabilizing an already troubled region. But as VOA State Department Correspondent Scott Stearns reports, confronting those militants could end up helping the embattled Syrian President Bashar al-Assad.
Video

Video Made in America Socks Get Toehold in Online Fashion Market

Three young entrepreneurs are hoping to revolutionize the high-end sock industry by introducing all-American creations of their own. And they’re doing most of it the old-fashioned way. VOA’s Julie Taboh recently caught up with them to learn what goes into making their one-of-a-kind socks.
Video

Video Americans, Ex-Pats Send Relief Supplies to West Africa

Health organizations from around the world are sending supplies and specialists to the West African countries that are dealing with the worst Ebola outbreak in history. On a smaller scale, ordinary Americans and African expatriates living in the United States are doing the same. VOA's Carol Pearson reports.

AppleAndroid