Indonesia Ups The Ante In Disputed South China Sea, Oil and Gas Lurks In The Background
CONTRIBUTOR
I am an energy journalist and geopolitical analyst based in Asia.
Activists hold a protest in front of the Chinese Consular Office in Manila on Jun. 12. The protesters shouted slogans against China’s reclamation and construction activities on islands and reefs in the Spratly Group of the South China Sea. (NOEL CELIS/AFP/Getty Images)
The noose finally appears to be closing on China, well at least a little. First, the Philippines scored a major geopolitical victory last month when The Hague agreed to hear its claim against Beijing’s recent land grabbing and subsequent land reclamation activities in Scarborough Shoal and the Spratly Islands (claimed by both China and the Philippines) in the South China Sea. According to the UN’s mandated 200-nautical mile Exclusive Economic Zone (EEZ), much of the area in dispute actually does lie within Manila’s EEZ. Not to be deterred and with little options due to its limited military and economic muscle, Manila now not only has the world watching even closer to its apparent legitimate claims, Indonesia has also called China’s bluff.
On Thursday, Indonesia’s Foreign Minister said that his country asked China to clarify its South China Sea claims but has not received an answer. A day earlier Indonesia’s security chief said that Jakarta could also take Beijing to international court over the island dispute. Indonesia is accusing China, something Beijing despises from its smaller Asian neighbors, of including parts of the Indonesian-ruled Natuna islands within China’s so-called nine-dash line. China’s nine dash line is a U shaped designation on the map, extending from Hainan, China’s southern most territory, southward, encompassing about 90% of the South China Sea, including overlapping claims with Vietnam, Brunei, Malaysia, Taiwan, the Philippines and now apparently Indonesia.
“The position of Indonesia is clear at this stage that we do not recognize the nine-dash line because it is not in line with … international law,” said Indonesian Foreign Ministry spokesman Armanatha Nasir. Chinese Foreign Minister Hong Lei said during a press briefing Thursday that China is committed to resolving relevant disputes with countries directly contesting its claims in the South China Sea on the basis of respect for international law and historical facts. He said China recognized the Natuna Islands as belonging to Indonesia and didn’t have any objections.
However, as the de facto leader and arbitrator among Association of Southeast Asian Nations (ASEAN) and with various member states locked in disputed territorial claims with Beijing, and with Chinese naval vessels penetrating Indonesian territorial waters around the Natuna Islands, Jakarta is essentially being forced to act. In October, Bloomberg said that Indonesia is considering using drones and submarines to strengthen its grip over the gas-rich waters around the Natuna Islands in response to China’s growing military presence in the South China Sea.
Overall, China sees things differently. As the vastly larger country in land mass, population, and both economic and military might, Beijing sees the extension of its periphery as part of its rise to status as the world’s newest super power. Many within Chinese merely see it as a justified defensive move. Considering China’s less than stellar history with Japan and several Western powers, which is still vehemently taught to every Chinese student, one can understand (though still disagree with) Beijing’s and the Chinese populace’s views on the matter.
China also claims ownership over most of the disputed areas by historical mandate. Not to be outdone, Vietnam in recent years also produced ancient maps to justify its own claims in the area, while China’s 13th century mapping claim took some hits a few years ago. In April 2012, news broke of a message sent to Washington by the US Embassy in Beijing on September 8, 2008 and uncovered by WikiLeaks. Cable 08BEIJING3499 stated that a Chinese Ministry of Foreign Affairs official and a local scholar could not identify specific historical records to justify China’s claim that covers the whole Spratly Islands and areas within other countries EEZs.
Nonetheless, all of this geopolitical posturing is dangerous as one academic and professor at a Western defense academy told me recently. There is in effect a mini-arms race now underway in the Asia-Pacific region, mostly due to China’s South China Sea thrust. The academic said that it’s just a matter of time before these forces, mostly naval and aerial, could clash in the ever congested body of water. The professor is correct: If not intentionally, then by accident, a young sailor with his finger on the trigger or a young fighter pilot making a mistake, or who is even overeager, could easily escalate the situation, taking it out of the grip of diplomats and politicians that are supposedly micro-managing the geopolitical flash-point.
Yet, beneath these tensions is another factor to be considered – hydrocarbons (oil and gas) and depending on who you believe, lot’s of it. One older Chinese estimate places potential oil resources in the South China Sea as high as 213 billion barrels of oil, though that estimated seems extremely high. A conservative 1993/1994 US Geological Survey (USGS) report estimated the sum total of discovered reserves and undiscovered resources in the offshore basins of the South China Sea at 28 billion barrels.
According to the USGS, natural gas is more abundant in the area than oil. The USGS estimates that about 60%-70% of the area’s hydrocarbon resources are gas and has placed the sum total of discovered reserves and undiscovered resources in the offshore basins of the South China Sea at 266 trillion cubic feet. Chinese state-owned oil major Chinese National Offshore Oil Company (CNOOC), responsible for most of China’s offshore hydrocarbon development, estimates that the area holds around 125 billion barrels of oil and 500 trillion cubic feet of gas in undiscovered areas, although the figures have not been confirmed by independent studies.
Others, however, claim that oil and gas reserves in the South China Sea are exaggerated. EIA economist Alexander Metelitsa, said there does not seem to be much oil and gas near the disputed Spratly and Paracel Islands.
“When we are talking about in the next decade, in the next couple of decades, maybe even fifty years, we are talking about conventional oil and natural gas in this region,” Metelitsa said
Moreover, the South China Sea is one of the world’s busiest shipping lanes, carrying vast amounts of all oil to North Asia, and large amounts of liquefied natural gas (LNG) to Japan and South Korea, the world’ two largest LNG importers, respectively. About 15.2 million barrels of oil and petroleum products pass per day through the Strait of Malacca, making it the second most important passageway for oil in the world after the Strait of Hormuz in the Middle East. Around $5.3 trillion in total trade passes through the South China Sea each year.
With China’s growing nationalist fervor, stoked even stronger by current President Xi Jinping’s foreign policy and the country’s growing thirst for oil and natural gas, though that demand growth has slowed recently due to China’s slowing economic growth, the South China Sea dispute will continue to gain momentum. However, with the Philippines and now Indonesia standing up to China, something that ASEAN as a block has never done and will likely not have the political fortitude to ever do, the pendulum is slowly shifting against China. Only time will tell how this geopolitical drama will unfold.
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