South China Sea Region – part one

Published February 25th, 2001 - 02:00 GMT

Al-Bawaba’s interest in the South China Sea region is mainly focused on Indonesia as booth the largest Muslim country in the world as well as a major player in OPEC, and Malaysia another important participant in the oil market. 


The South China Sea region is the world's second busiest international sea lane. More than half of the world's supertanker traffic passes through the region's waters. 


In addition, the South China Sea region contains oil and gas resources strategically located near large energy-consuming countries.  


Information contained in this report is the best available as of February 2001 and is subject to change.The South China Sea encompasses a portion of the Pacific Ocean stretching roughly from Singapore and the Strait of Malacca in the southwest, to the Strait of Taiwan (between Taiwan and China) in the northeast (see the footnote for a more precise definition).  


The area includes more than 200 small islands, rocks, and reefs, with the majority located in the Paracel and Spratly Island chains.  


Many of these islands are partially submerged islets, rocks, and reefs that are little more than shipping hazards not suitable for habitation; the total land area of the Spratly Islands is less than 3 square miles.  


The islands are important, however, for strategic and political reasons, because ownership claims to them are used to bolster claims to the surrounding sea and its resources.  


The South China Sea is rich in natural resources such as oil and natural gas. These resources have garnered attention throughout the Asia-Pacific region.  


Until recently, East Asia's economic growth rates had been among the highest in the world, and despite the region's recent economic crisis, growth prospects in the long-term remain among the best in the world.  


This economic growth will be accompanied by an increasing demand for energy. Over the next 20 years, oil consumption in developing East Asian countries (excluding India) is expected to rise by almost 3 percent annually on average, with almost half of this increase coming from China.  


If this growth rate is maintained, oil demand for these nations will increase from about 12 million barrels per day in 2000 to more than 20 million barrels per day by 2020 - a 2/3 increase over current consumption levels.  


Almost all of this additional demand, as well as Japan's oil needs, will need to be imported from the Middle East and Africa, and to pass through the strategic Strait of Malacca into the South China Sea.  


Countries in the Asia-Pacific region depend on seaborne trade to fuel their economic growth, and this has led to the sea's transformation into one of the world's busiest shipping lanes.  


Over half of the world's merchant fleet (by tonnage) sails through the South China Sea every year. The economic potential and geopolitical importance of the South China Sea region has resulted in jockeying between the surrounding nations to claim this sea and its resources for themselves.  


South China Sea territorial issues: Competing territorial claims over the South China Sea and its resources are numerous, with the most contentious revolving around the Spratly Islands and Paracel Islands .  


However, ownership of virtually all of the South China Sea is contested. The disputed areas often involve oil and gas resources: Indonesia's ownership of the gas-rich fields offshore of the Natuna Islands was undisputed until China released an official map with unclear maritime boundaries indicating that Chinese-claimed waters in the South China Sea may extend into the waters around the Natuna Islands.  


Indonesia responded by choosing the Natuna Islands region as the site of its largest military exercises to date in 1996.  


The Philippines' Malampaya and Camago natural gas and condensate fields are in Chinese-claimed waters. China has not, however, voiced a specific objection to the development of these fields.  


Many of Malaysia's natural gas fields located offshore Sarawak also fall under the Chinese claim, but as with the Philippine gas fields, China has not specifically objected to their development.  


Vietnam and China have overlapping claims to undeveloped blocks off the Vietnamese coast. A block referred to by the Chinese as Wan' Bei-21 (WAB-21) west of the Spratly Islands is claimed by the Vietnamese in their blocks 133, 134, and 135.  


The inability to resolve these disputes has prevented Conoco and PetroVietnam from undertaking exploration in these blocks that had been planned under a tentative pact.  


In addition, Vietnam's Dai Hung (Big Bear) oil field is at the boundary of waters claimed by the Chinese.  

Maritime boundaries in the gas-rich Gulf of Thailand portion of the South China Sea have not been clearly defined.  


Several companies have signed exploration agreements but have been unable to drill in a disputed zone between Cambodia and Thailand. Overlapping claims between Thailand and Vietnam were settled on August 8, 1997, and cooperative agreements for exploration and development were signed for the Malaysia-Thai and Malaysia - Vietnam Joint Development Areas (the latter effective June 4, 1993).  


Most of these claims are historical, but they are also based upon internationally accepted principles extending territorial claims offshore onto a country's continental shelf, as well as the 1982 United Nations Convention on the Law of the Sea.  


UN law of the sea:  

The 1982 convention created a number of guidelines concerning the status of islands, the continental shelf, enclosed seas, and territorial limits.  


Among the most relevant to the South China Sea are:  

Article 3, which establishes that "every state has the right to establish the breadth of its territorial sea up to a limit not exceeding 12 nautical miles";  

Articles 55 - 75 define the concept of an Exclusive Economic Zone (EEZ), which is an area up to 200 nautical miles beyond and adjacent to the territorial sea.  


The EEZ gives coastal states "sovereign rights for the purpose of exploring and exploiting, conserving and managing the natural resources, whether living or non-living, of the waters superjacent to" (above) "the seabed and of the seabed and its subsoil...".  


Articles 76 defines the continental shelf of a nation, which "comprises the seabed and subsoil of the submarine areas that extend beyond its territorial sea throughout the natural prolongation of its land territory to the outer edge of the continental margin, or to a distance of 200 nautical miles...".  


This is important because Article 77 allows every nation to exercise "over the continental shelf sovereign rights for the purpose of exploring it and exploiting its natural resources".  


Article 121, which states that rocks that cannot sustain human habitation or economic life of their own shall have no exclusive economic zone or continental shelf.  


The establishment of the EEZ created the potential for overlapping claims in semi-enclosed seas such as the South China Sea.  


These claims could be extended by any nation which could establish a settlement on the islands in the region. South China Sea claimants have clashed as they have tried to establish outposts on the islands (mostly military) in order to conform with Article 121 in pressing their claims.  


The Law of the Sea Convention states that countries with overlapping claims must resolve them by good faith negotiation. The use of the Joint Development Area principle, followed in the Gulf of Thailand, is one model that has been successfully used by South China Sea claimants.  

Source: United States Energy Information Adminisstration 

© 2001 Mena Report (

You may also like