1. The Status of Sovereignty, Mining and
Extraction Rights of the Rim Nations of
the South China Sea
Bangkok, 28 February 2013
Dr. Hooman Peimani
Principal Fellow & Head
Energy Security Division
Energy Studies Institute
Contributed by: Sahara Piang Brahim (ESI Research Associate)
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2. I. The South China Sea (SCS): Importance
Source: BBC News Asia, South China Sea Dispute, Retrieved 21 February 2013, http://www.bbc.co.uk/news/world-asia-pacific-13748349
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3. I. The South China Sea (SCS): Importance
A. Resources
1 – Fossil energy: oil & gas to be discussed
2 – Minerals: e.g., manganese, iron, copper, and
cobalt, and rare formations such as manganese
nodules. Estimates on their reserves are unavailable.
B. Strategic
1 – Sea routes connecting the Asia-Pacific
region/Americas to the Middle East and Europe
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4. II. Sovereignty disputes over the ownership of
certain islands and their territorial waters
A. Major contenders: China, Taiwan and
certain ASEAN countries (Brunei, Indonesia,
Malaysia, the Philippines and Vietnam)
B. Ownership disputes within ASEAN and
between certain ASEAN countries and
China: Multiple ownership claims
C. What is at stake: territories, sovereignty,
strategic military/security considerations,
national prestige and untapped energy
Source: http://www.southchinasea.org/2011/08/19/south-china-sea-reference-map-cia-small
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5. III. Energy resources of the South China
Sea: The main source of interest/conflict
A. Mainly offshore oil and gas reserves
with unknown volume of oil and gas
B. Absence of scientifically-proven data on
these reserves
C. Estimates in absence of such data:
e.g., approximately 11 billion barrels of oil
and 5.38 trillion cubic meters of natural gas
in proved and probable reserves
D. It is unknown whether these resources
are commercially viable.
E. In absence of scientific data, they
may well be only short-term or
low-yielding resources.
Source: http://www.japanfocus.org/-ian-storey/2734
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6. IV. Ongoing disputes: major players
A. Not all the seven rim countries are actively involved
in the disputes.
B. Major players in the ongoing disputes: China,
Vietnam and the Philippines
C. Low-intensity naval confrontations between China
and Vietnam and China and the Philippines in 2011
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7. V. Significance of the energy resources for the
major contenders
A. For China
1-Compared to the Philippines and Vietnam, China
is very rich in oil (14.7 bb), gas (3.1 tcm) and coal (114.5 bt),
but needs large imports of oil (p:4.09; c: 9.758) and gas
(p:102.5 bcm; c: 130.7 bcm).
2- Establishing its ownership over the disputed parts of
the SCS the extent of its oil and gas reserves are yet to be
determined will be important but not vital for China.
3- As a rich emerging superpower, China can also afford
large imports of oil and gas unlike the Philippines and
Vietnam.
Sources: http://www.bp.com/sectiongenericarticle800.do?categoryId=9037130&contentId=7068669
http://www.chinaforgroups.com/chinamap.html
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8. V. Significance of the resources for the
major contenders
B. For Vietnam
Vietnam has small oil (4.4 bb), gas (0.6 tcm) and coal
(150 mt) reserves. Its oil production is declining (fluctuating
around its domestic needs (p: 328,000 bpd; c: 358,000). It has
small gas production consumed domestically (8,5 bcm in 2011).
Its coal production (24.9 mtoe) exceeds its consumption (15 mtoe)
enabling it to export coal.
C. For the Philippines
The Philippines is not self-sufficient in oil (c:256,000 bpd),
gas (c: 3.6 bcm) and coal (c:8.3 mtoe) and thus heavily relies on
Fossil energy imports.
The SCS oil and gas reserves could significantly
increase their reserves to help them meet their
growing energy demand or potentially create an
export capacity for them.
Sources: http://www.lonelyplanet.com/maps/asia/philippines/
http://www.lonelyplanet.com/maps/asia/vietnam/
http://www.bp.com/sectiongenericarticle800.do?categoryId=9037130&contentId=7068669
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9. V. Significance of the resources for the
major contenders
Production/Consumption of Energy in China in 2009
(Thousand tonnes of oil equivalent)
Supply and Consumption Coal & Crude oil Oil products Natural Nuclear Hydro Geotherm. Biofuels & Electricity Heat Total
peat Gas solar etc. waste
Production 1537825 189619 - 71338 18277 52945 11316 203620 - - 2084940
Imports 69300 203653 47798 6387 - - - - 517 - 327655
Exports -15249 -5073 -28236 -2685 - - - - -1495 - -52739
Intl. marine bunkers - - -9641 - - - - - - - -9641
Intl. aviation bunkers - - -2711 - - - - - - - -2711
Stock changes -74308 -6765 -9331 - - - - - - - -90403
TPES 1517568 381434 -2121 75040 18277 52945 11316 203620 -979 - 2257101
Electricity and CHP plants -736735 -44 -4037 -11231 -18277 -52945 -2473 -808 317850 - -508701
Oil refineries - -371094 361650 - - - - - - - -9444
Other transformation - - - - - - - - - - -
TFC 8922 - 15177 625 - - - 24292 6616 - 55646
Source: OECD/IEA, 2009 Energy Balance for China, People’s Republic of, Retrieved 21 February 2013, from http://www.iea.org/stats/balancetable.asp?COUNTRY_CODE=CN
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10. V. Significance of the resources for the
major contenders
Production/Consumption of Energy in Vietnam in 2009
(Thousand tonnes of oil equivalent)
Supply and Consumption Coal & Crude oil Oil products Natural Nuclear Hydro Geotherm. Biofuels & Electricity Heat Total
peat Gas solar etc. waste
Production 24480 17330 - - - 2578 - 25155 - - 76642
Imports 465 - 14805 7093 - - - - 353 - 15623
Exports -13995 -13614 -1811 - - - - - -32 - -29453
Intl. marine bunkers - - -287 - - - - - - - -287
Intl. aviation bunkers - - -387 - - - - - - - -387
Stock changes 1652 -1008 1266 - - - - - - - 1910
TPES 12602 2708 13585 7093 - 2578 - 25155 321 - 64048
Electricity and CHP plants -3680 - -647 -6468 - -2578 - - 7154 - -6211
Oil refineries - -1486 1514 - - - - - - - 28
Other transformation - -1222 725 - - - - -863 -859 - -2219
TFC 8922 - 15177 625 - - - 24292 6616 - 55646
Source: OECD/IEA, Energy Balances of Non-OECD Countries (Paris: International Energy Agency, 2011), p. II.284.
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11. V. Significance of the resources for the
major contenders
Production/Consumption of Energy in the Philippines in 2009
(Thousand tonnes of oil equivalent)
Supply and Coal & Crude Oil Natural Nuclear Hydro Geotherm. Biofuels & Electricity Heat Total
Consumption peat oil products Gas solar etc. waste
Production 2474 1143 - 3213 - 842 8881 6922 - - 23474
Imports 4496 6909 7440 - - - - 33 - - 18877
Exports -1052 -1004 -484 - - - - - - - -2541
Intl. marine bunkers - - -194 - - - - - - - -194
Intl. aviation bunkers - - -1044 - - - - - - - -1044
Stock changes - 432 -169 - - - - 8 - - 271
TPES 5918 7479 5547 3213 - 842 8881 6963 - - 38842
Transfers - - - - - - - - - - -
Statistical Differences 672 -353 -33 -1211 - - - -6 - - 280
Electricity plants -4890 - -1165 -13294 - -842 -8881 - 5325 - -13417
CHP plants - - - - - - - - - - -
Heat plants - - - - - - - - - - -
Blast furnaces -42 - - - - - - - - - -42
Gas works - - - - - - - - - - -
Coke/pat.fuel/BKB - - - - - - - - - - -
plants
Oil refineries - -7126 7024 - - - - - - - -102
Petrochemical plants - - - - - - - - - - -
Liquefaction plants - - - -892 - - - - - - -
Other transformation - - - - - - - -1325 - - -1325
Energy industry own - - - -6743 - - - - -303 - -480
use
Losses - - - -749 - - - - -645 - -645
TFC 1658 - 11375 6120 - - - 5631 4377 - 23111
Source: OECD/IEA, Energy Balances of Non-OECD Countries (Paris: International Energy Agency, 2011), p. II.227.
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12. VI. The main energy reason for China’s interest
in the disputed parts of the SCS
A. Strategic thinking and not immediate or short-term needs
B. China’s naval weaknesses
1-Lacking naval supremacy
2-Unable to achieve it in the foreseeable future (30-50 years)
China’s first aircraft carrier Liaoning
Source: http://english.peopledaily.com.cn/90786/7960292.html
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13. VI. The main reason for China’s interest in the
disputed parts of the SCS
C. Beijing is concerned about its long-term secured
access to its supplying regions through the sea
routes dominated by the unrivalled American
navy.
The USA could well block those routes in
case of deterioration of Washington’s ties with
Beijing or the latter’s escalating conflicts with
an American ally, particularly, Taiwan. 1
D. Potentially, China’s sea-based oil and gas (LNG)
imports are not reliable.
USS George Washington off southern coast of Vietnam in South China
Sea on 20 October 2012. PHOTO: AP
2
Sources: http://www.straitstimes.com/breaking-news/asia/story/us-aircraft-carrier-cruises-through-disputed-south-china-sea-20121020
http://www.google.com.sg/search?q=map+of+asia&hl=en&prmd=imvns&tbm=isch&tbo=u&source=univ&sa=X&ei=j66IUNqmHPGuiQe_m4GoBg&sqi=2&ved=0CDIQsAQ&biw=1280&bih=866
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14. VII. China’s concerns about the unavailability
of sea-based supplies of fossil energy
A. Measures to address these concerns:
1- China needs to increase the
availability of energy (oil and gas)
resources within its territories.
2- China needs to increase its oil and
gas imports through land routes
uncontrolled by the USA.
•Increasing importance of piped oil
and gas, e.g., the Central Asian Gas
Pipeline
Source: http://worldpress.org/specials/pp/pipelines.htm
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15. VIII. Current situation
A. The ownership disputes are not yet resolved and no meaningful step has
been made in this regard by China, Vietnam and the Philippines.
B. Reason: incompatibility of the conflicting ownership claims leaving no room
for compromise under the different circumstances.
C. ASEAN has opted not to get involved in the disputes by supporting the
claims of the Philippines and Vietnam referring to them as bilateral issues of
the involved countries as evident in its summit meetings in April and
November 2012.
D. In absence of any regional support, Vietnam and the Philippines are
becoming closer to the USA seeking to expand its political and military
influence and presence in the Asia-Pacific region, including Southeast Asia.
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16. IX. Conclusions: Major trends
A. The possibility of a peaceful settlement of the disputes and thus
acceptance of a legal regime for the division of the SCS and its disputed
land/water territories is very unlikely in the foreseeable future.
B. The status of sovereignty, mining and extraction rights of the rim nations of
the South China Sea will remain ambiguous and unsettled in the
mentioned timeframe.
C. Major efforts to develop the oil/gas reserves in the disputed parts of the
SCS will be unlikely due to the uncertainty about the ownership rights to
discourage major energy companies from extensive involvements in such
projects.
D. The escalation of the current disputes to a full-scale military conflict pitting
China against Vietnam and the Philippines, while possible, will be unlikely
due to a lack of interest in such conflict by the three states and the USA.
E. Limited development projects and low-intensity naval and aerial
confrontations will be likely in the foreseeable future.
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17. Thank you for paying attention!
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