Sunday, August 28, 2005

Exploring the Spratlys

According to the Taipei Times, the Chinese oil firm China Oilfield Services has won the right to explore the disputed Spratly Islands for the presence of oil or natural gas deposits. China, the Philippines, and Vietnam agreed to jointly explore the island chain for hydrocarbons, but Taiwan and Malaysia also have claims to all or part of the island chain. (Both the Times and Wikipedia articles list Brunei as a claimant, but the CIA's World Factbook explains this is not the case.) This exploration has the potential to seriously affect the possibility of a conflict over the islands.

Significance of Spratly Islands
Based on the presence of oil and natural gas in the surrounding areas, some Chinese experts have estimated that the reserves beneath the islands rival that of the Persian Gulf. Non-Chinese experts offer lower, but still substantial estimates. Such a vast amount of oil is valuable to anyone, but to China, vast oil deposits in their own backyard take on a whole new meaning. China has, in recent years, shifted its petrodiplomacy into high gear, seeking to acquire oil resources anywhere it can find them and strengthening its ability to protect the flow of oil into China.

Fossil fuels are not the only thing making these islands vital to world trade and to especially every Asian nation. The Spratlys sit astride significant Asian sea lines of communication (SLOCs). More than half of the world's supertanker traffic and more than a quarter of the world's oil passes through the area, making it the world's second most travelled sea lane.

Previous spats between claimants have been minor. This can be partially attributed to limited naval power projection capability on the part of most of the involved nations, but also, I would contend, because the extent of oil or gas reserves have never been established. To date, exploration has not been conducted to confirm the presence of fossil fuels because of the ownership dispute.

China, of all the claimants of the islands, has the most forces stationed on the islands and has the greatest ability to take the islands by force. It also is the world's fastest growing consumer of fossil fuels and has been quite active lately in searching for more sources of oil to fuel its growth. (The latest Economist, has an article on this subject entitled The Oiloholics - subscription required.) Yet China still had not taken steps to acquire the islands by force. The importance of the shipping lanes to all Asian economies was one factor cooling any aggression being contemplated by the Chinese, but more importantly it was simply illogical to take an island chain by force and face the resulting international condemnation in order to attain unconfirmed oil deposits, even if prices increase significantly in the years ahead.

While it is good to see cooperation between half of the claimants (the PRC and ROC could obviously never cooperate on such an issue, so unanimity was out of the question from the beginning), confirming the existance of vast oil reserves under the island chain has the potential to seriously alter the strategic calculation of the countries involved and could spark a conflict over the islands. If the seismic exploration planned by China Oilfield Services shows the Chinese estimates to have been more accurate than their international counterparts, the importance of the islands to each of the claimants (especially China) rises, as does their willingness to commit serious resources toward defending (or strengthening) their claim. Of course, there is also the possibility that the lower international estimates are more accurate. Were the explorers to find less oil and gas than expected, it could potentially calm--but not end--the crisis.

Update: Bernard Cole's The Great Wall at Sea would seems to support my conclusions:
At present, China, the Philippines, Brunei, Indonesia, Malaysia, and Vietnam are all harvesting energy resources from the South China Sea. Disagreements about maritime boundaries are being negotiated or ignored, except for the most contentious area--the Spratly Islands. This potentially dangerous situation is kept in check by the fact that meaningful oil or gas reserves have not been found... If commercially valuable petroleum deposits are found, Beijing will undoubtedly adopt an even less flexible position on sovereign rights to the area, with a modernizing PLAN to enforce its claims. [38]