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Oil Becoming Code for Sovereignty in Contested South China Sea

FILE - Ships of Chinese Coast Guard are seen near Chinese oil rig Haiyang Shi You 981 in the South China Sea, about 210 km (130 miles) off shore of Vietnam.

The search for oil and natural gas is seen as a driving factor in rival claims to the South China Sea, with many of the countries in the region currently reliant largely on fuel imports.

Yet no one has struck a head-turning deposit of oil or gas in the 3.5-million-square-km (1.4-square-mile) sea, which stretches from Taiwan to Singapore, despite prospecting since 1970.

Analysts who follow the South China Sea disputes point to national sovereignty as a top reason that countries are exploring for oil and gas. Brunei, China, Malaysia and Vietnam do their own prospecting. The Philippine government accepted exploration bids in 2014 from private companies.

“The South China Sea is not Saudi Arabia, it’s not Iraq, it’s not the Middle East,” said Fabrizio Bozzato, associate researcher specialized in international affairs at Tamkang University in Taiwan. “The primary purpose of the claimants to be there is not because they want to access the oil and gas resources in the area. Developing hydrocarbon resources in the South China Sea would be way to mark the territory.”

Fossil fuel exploration came up in October when Manila and Beijing began discussing joint oil exploration, according to Philippine media. The talks are part of rebuilding relations that were strained since 2012 when vessels from the two sides became locked in a standoff at Scarborough Shoal west of Luzon Island.

In Taiwan, which also claims much of the South China Sea, the former president suggested joint resource exploration with rival claimants.

But the act of exploring for oil or gas sends a signal of control over the tract of sea being drilled, analysts say, pointing to a series of spats.

FILE - An aerial view of one of the structures built by China at the Philippine-claimed Mischief Reef, Spratly Islands in South China Sea.
FILE - An aerial view of one of the structures built by China at the Philippine-claimed Mischief Reef, Spratly Islands in South China Sea.

When the Philippines turned up gas off Palawan in 1976, China complained and stalled the project.

The positioning of a Chinese offshore oil driller’s rig in the Gulf of Tonkin in 2014 sparked a boat ramming incident with Vietnam, where deadly anti-China riots also erupted. Vietnam formally protested another Chinese rig in April this year.

Joint exploration would imply a concession of sovereignty, Baker said.

“There’s probably very little incentive for countries to actually go and try to do this exploration simply because it’s very difficult to come to an agreement between different countries because it requires some acknowledgement of the right to exploit those resources, which means they have to give up some sense of sovereignty,” said Carl Baker, director of programs at Pacific Forum CSIS in Honolulu.

“And for the Chinese this is very difficult to do, and for the Philippines and Vietnam, they’ve found it creates problems in domestic circles as well,” he said.

The Philippines began more than 40 years ago looking for oil west of Palawan island, at Reed Bank. In 1984, a Philippine company found an oil field in the same region and it supplies 15 percent of the annual oil consumption in the Philippines.

The U.S. Energy Information Agency estimates 11 billion barrels’ worth of oil under the sea and 190 trillion cubic feet of natural gas. Much of that lies under the continental shelves of Southeast Asian claimants, which are not disputed. Much of that potential energy has not been tapped yet, Baker said.

Saudi Arabia has an estimated 268 billion barrels of proven oil reserves and Iraq has 144 billion, the U.S. Energy Information Agency says. Russia leads the world in natural gas reserves with 5,085 trillion cubic feet.

Falling oil prices and the costs of extracting any fuel from under the seabed limit the value of exports from any undersea discoveries, analysts add.

In Malaysia, the claimant country that has found the most fossil fuel to date, few are pushing for exploration, said Oh Ei Sun, international studies teacher at Singapore Nanyang University. Malaysia has about five billion barrels of oil and 80 trillion cubic feet of natural gas.

“Even if you discover new sources of oil and gas, you would still have to spend a lot on equipment and other resources to dig them out, so the urgency, the call for having new sources of oil and gas at the moment I don’t think they are very high,” Oh said.