As China’s economic and strategic influence grows, neighbours are benefiting in both aid and trade. But the fear of a new hegemony in the region is ever more evident in international and territorial waters of South China Sea.
China, Taiwan, the Philippines, Vietnam, Malaysia and Brunei all have competing claims for part or all of the archipelagos in the South China Sea, the Spratly and Paracel Islands. The region contains large untapped oil and gas reserves. It also includes some of the world’s busiest shipping lanes, with mostly crude oil from the Middle East for East Asian countries passing through. The strait of Melacca is an important passage that also links the archipelagos islands to the South China Sea and half of the world’s oil and LNG passes through it. With sovereignty over these islands is disputed between these countries, it is not clear which country the region extensive natural gas and oil belong to, but the interested countries perceive that it may and thus promote their claims to sovereignty.
The region is also important to the bordering states because of the value for fishing and as a strategic sea-lane. But the 1992 United Nations Convention on the Law of the Sea, Coastal states can establish sovereignty over their territorial waters, which extend 12 nautical miles off their coastlines, and an exclusive economic zone (EEZ), to 200 nautical miles off their coast.
UNCLOS limits the right to survey and to explore natural resources in EEZs to the coastal states, but non-adjacent nations are allowed to pursue other activities, including intelligence-gathering, as in all other international waters. China has signed and ratified UNCLOS in 2000 laying claim to the Paracel islands in South China Sea with a counter-claim by Vietnam. This makes conflict between China and Vietnam particularly robust.
For example, in the last decade, the region has seen increasing militarization, and a number of its states have established military bases or naval stations. Fighting has erupted on several occasions. The most recent and significant violet confrontation took place in 2005 between China and Vietnam, leading to more than 150 casualties mostly fishermen. In 2007, China, Vietnam, and the Philippines signed an agreement for a joint exploration of the disputed territory, a breakthrough that can contribute to reducing the chance of conflict in the region. But few regular principles of border-delimitation are applicable to the territory, due to the irregular coasts and numerous clusters of islands in the South China Sea.
It looks like a “New Persian Gulf” crisis is emerging in this region, the drive to exploit oil and natural gas resources in the South China Sea is leading to two main types of border-delimitation conflict: sovereignty in an area whose status is disputed that contains or potentially contains oil or natural gas resources, and distribution of the rights to extracting an energy resources that transits a number of borders. For example, Brunei and Philippines both lay claim to the Spratly islands in South China Sea too; as a drive to exploit additional energy resources rather than buying from the world market and a border-delimitation conflict is looming ahead. Until recently, many disputed borders areas-especially in the sea- have been left undetermined, since there was no concrete need for delimitation.
Rising Tensions but No Permanent Solution
However, with the discovery or the potential existence of oil and gas resources in many of these disputed zones, border-delimitation conflicts are emerging in a number of locations between states, especially in the South China Sea between China and Vietnam; Philippines and Brunei and, Indonesia and Malaysia. A vast number of the world’s border areas have not been delimited. This is especially true for countless maritime borders. Many states dispute the borders between them, but have left the issue unresolved, since there was no practical need for the delimitation. But once one of the countries involved in a border issue begins the exploration and production of oil and gas, the issue tends to move to the forefront.
Nevertheless, in light regional states (particularly China), estimated the reserves of hydrocarbons to be found in the South China Sea to be over 50 billion barrels of crude oil and more than 20 trillion cubic meters of natural gas. The state-owned China National Offshore Oil Company (CNOOC) sees the South China Sea as an “Oil Bonanza” and was scheduled to invest $US30 billion in deep water oil drilling in the South China Sea in keeping with the initiative set for expanded drilling by the 12th Five Year Plan (2011-2016). But Vietnam who is the third largest oil producer of 370,000 b/d in 2010 (BP) suffered a decline in 2011 due to exhaustion of its main oil field and has forced Vietnam to see location offshore in the South China Sea.
This made the situation between China and Vietnam particularly difficult to resolve. Exxon Mobile, a U.S. energy company signed exploration agreement with Vietnam in the South China Sea are exacerbating already existing tension. The Chinese authorities warned Exxon Mobil of possible consequences if it go ahead with exploration in the Paracel Islands. Estimates of reserves vary widely. Based on U.S. geological survey, the South China Sea has proven oil reserves of 7.7 billion barrels and an estimated 900 trillion cubic feet of natural gas, a potentially huge bounty.
Escalating Tensions over Sovereignty
Geopolitical and military tensions have heightened sharply over the past four months in the South China Sea, China, Taiwan, and the Philippines have each escalated their rhetoric regarding the contested oil-rich Spratly Islands and deployed troops and military equipment to the region. The first dispute is the Spratly Islands are claimed in whole or in part by Brunei, China, Malaysia, the Philippines, Taiwan and Vietnam. Two-fifths of global sea traffic travels through the South China Sea. Therefore, control of the region is of vital strategic interest to both the United States and China.
For example, a second related dispute was in February 2011, a Philippine Forum Energy concluded a two-year survey of oil and natural gas resources in the region. But on 2 March 2011, Chinese patrol boats accosted a vessel belonging to Forum Energy in disputed waters. The Philippine Navy sent two fighter jets to confront the Chinese patrol boats.
On 5 April 2011, the Philippines filed an official protest before the United Nations, contesting China’s claim to Spratly Islands and the South China Sea. In particular, Manila protested a map issued by China in May 2009 indicating its U-shaped claim to more than 80 per cent of the South China Sea. China escalated the dispute, when on April 14, it sent a letter to the United Nations stating that the Philippines had invaded and occupied Chinese territory. On May 2, China announced that it would be adding 1,000 personnel and 36 vessels to it Marine Surveillance Forces. These forces are directly responsible for patrolling the disputed waters and that any development made by CNOOC in the region would be conducted under their protection.
A third dispute is between China and ASEAN. These two reached a common “Declaration on Conduct” (DoC) in 2002 in an attempt to minimise the risk of conflict. But efforts to turn it into a formal and binding code have got nowhere, partly because of China’s anger at ASEAN’s attempt to develop a common approach. China argues that ASEAN has no role in territorial issues, and insists on negotiating with the other claimants bilaterally. ASEAN sees this as an effort to pick off its members one by one. It argues that its own charter forces members to consult, as they do before each working group on the code of conduct. But China believed that, each of the claimants to the South China Sea would negotiate a separate arrangement with China independent of interaction with other powers in the region. The negotiations would also pointedly exclude any participation by the United States.
The result is the all nine states that touch the South China Sea are more or less arrayed against a common enemy, China and therefore dependent on the United States for diplomatic and military support. These conflicting claims are likely to become even more acute as Asia’s spiralling energy demands and consumption is expected to double by 2030, with China accounting for half that growth make South China Sea the ever more central guarantor of the region’s economic strength.
Moreover, high energy prices and growing world demand have made many areas of interest commercially that was previously overlooked for exploitation due to their geographic, geological, or geopolitical complexity. And many of these are found in areas of contested sovereignty between countries. In the last decade, a number of direct military confrontations have emerged between states attempting to survey or exploit oil and gas resources in contested areas.
In addition, oil and gas deposits that cross frontiers also create a unique set of challenges to the states that share the deposit. In contrast to mineral deposits, where the dividing line of the deposit is separable into clearly defined units, oil and gas deposits that extend beyond a dividing line can be exploited, wholly or in part, from either or both sides of the line. In the case of liquid deposits shared by two or more states, division is especially complicated, because no state can determine the precise amount of oil or gas that it owns, and such situation demands cooperation from all the involved states.
But if exploitation by one of the involved countries in South China Sea in the disputed areas affects the state of the deposits and their accessibility by the other countries along the line, then there should be joint exploration development zone (JEDZ). This is due to the fact that sovereignty over natural resources is not applicable to the delimitation of liquid mineral deposits that overlie a number of borders. The sea lanes and oil rich water of the South China Sea have long been a global flashpoint. The extraordinary economic growth of China and the decline of the United States have resulted in a geopolitical confrontation which is moving the direction of armed conflict. China’s dependence on imported oil is a point of painful vulnerability. China thus seeks to drill in disputed waters and is conducting diplomacy and building its military to support its claims in the region. In conclusion, affected states in the South China Sea should cooperate in exploration and exploitation of oil and gas resources that lie in the disputed borders to avoid a new Persian Gulf crisis that may disrupt world energy supply.