PUERTO PRINCESA, Philippines — When China’s largest offshore petroleum producer launched a $1 billion oil rig this summer from Shanghai, Lt. Gen. Juancho Sabban, the commander of Philippine military forces 1,500 miles away in the South China Sea, began preparing for trouble.
The drilling platform, China said, would soon be heading in the general’s direction — southward into waters rich in oil and natural gas, and also in volatile fuel for potential conflict.
“We started war-gaming what we could do,” said Sabban, a barrel-chested, U.S.-trained marine who, as chief of the Philippines’ Western Command, is responsible for keeping out intruders from a wide swath of sea that Manila views as its own but that is also claimed by Beijing.
China, which imports more than half its oil, will nearly double its demand for it over the next quarter-century, according to the International Energy Agency in Paris. Its demand for natural gas — believed to be particularly abundant beneath an archipelago of contested islands and reefs known as the Spratlys, just west of here — is projected to more than quadruple.
During the past year, China has grown increasingly assertive in its maritime claims, which collide with those of not only the Philippines but also Vietnam, Malaysia, Taiwan and Brunei, and in a dispute with Japan over islands in the East China Sea, near oil and gas deposits.
Early this year, Chinese vessels, including craft from the People’s Liberation Army Navy, erected posts and unloaded construction materials on and near a reef near the coast of Palawan. Sabban had the Chinese markers dismantled.
With consumption soaring and the price of imports rising, China is desperate for new sources to boost its proven energy reserves, which for oil now account for just 1.1 percent of the world total — a paltry share for a country that last year consumed 10.4 percent of total world oil production and 20.1 percent of all the energy consumed on the planet, according to the BP Statistical Review of World Energy.
“The potential for what lies beneath the sea is clearly a big motivator” in a recent shift by China to a more pugnacious posture in the South China Sea, said William Fallon, a retired four-star admiral who headed the U.S. Pacific Command from 2005 until 2007. China is wary of pushing its claims to the point of serious armed conflict, which would torpedo the economic growth on which the party has staked its survival.
Nobody yet really knows the true extent of the hydrocarbon wealth over which they would be negotiating. In the absence of detailed surveys, estimates vary widely, though even a lowball figure by the U.S. Geological Survey estimates that the South China Sea could contain nearly twice China’s known reserves of oil and plenty of gas, too.
In January, the Ministry of Land and Resources in Beijing told the People’s Daily, the Party’s official organ, that Chinese geologists had found 38 oil and gas fields under the South China Sea and would start exploiting them this year. The ministry declined to elaborate or make officials available for interviews.
One uncertain factor is a meshing of Chinese commercial, strategic and military calculations. Like other giant energy companies in China, the China National Offshore Oil Corp., or CNOOC, the owner of the new Chinese rig, pursues profit but is ultimately answerable to the party, whose secretive Organization Department appoints its boss.
The oil corporation is listed on the Hong Kong Stock Exchange, but a state-owned parent company in Beijing holds a majority of its shares — and makes all key decisions. This adds a layer of hidden calculation to what, in companies driven only by the bottom line, would be a straightforward and relatively predictable business agenda.
When CNOOC took delivery of the new high-tech rig in May, Sabban was alarmed at Chinese reports that it would start work at an unspecified location in the South China Sea. With only a handful of aging vessels under his command but determined to block any drilling in Philippine-claimed waters, he came up with an unorthodox battle plan: He asked Filipino fishermen to be ready to use their boats to block the mammoth rig should it show up off the coast of Palawan, a Philippine island from whose capital, Puerto Princesa, the lieutenant general runs Western Command.
Across the region, militaries are bulking up, most notably China’s, which in August launched its first aircraft carrier, built on a Soviet-made hull.
China, which has boosted military spending by annual average of more than 12 percent over the past decade, has poured money into its navy. It completed a huge new naval base last year on Hainan Island to accommodate attack and ballistic-missile submarines for its South Sea Fleet and has made far more rapid progress than expected in developing anti-ship missiles that could one day sink U.S. aircraft carriers. According to a recent Pentagon report, China will likely build “multiple” carriers of its own over the next decade.
Vietnam, which in May accused China of slicing cables from an oil survey ship, meanwhile is buying Russian submarines and hosting visits by the U.S. Navy. The Philippines has just bought what is now its navy’s biggest vessel: a 40-year-old former U.S. Coast Guard ship. Washington — which has a 20-year-old mutual-defense treaty with Manila — threw in a new weapons system for free.