Charting the rough seas over the South China Sea dispute

By John Peter Himor

It has been over a month since the Permanent Court of Arbitration (PCA) in The Hague, Netherlands backed the Philippines’ 2013 case against China’s claims of the South China Sea (SCS), slamming China for their ungrounded “nine-dash” claim, their large-scale destruction of the disputed area, and their impedance of non-Chinese oil exploration and fishing. The case proved to be a great legal victory for the Philippines, winning almost all of the claims it took to court, but China repeatedly refused to acknowledge the Tribunal’s ruling.

The contest for control over the SCS has long since been a source of friction among China and several Southeast Asian countries. China, Vietnam, Brunei, Taiwan, the Philippines, and Malaysia all have overlapping claims over these waters and the many scattered pinpricks of islands and rocks within it.

China’s argument and the argument against China

China’s broad claim of virtually all of the South China Sea has angered the other claimant countries, who have called China’s claims “selfish”, “unfounded” and “illegal”. The Philippines has argued that the rights to sovereignty do not hold for Beijing’s artificial islands, under the UNCLOS.

China asserts their history over the sea, as it is the “first to have discovered, named, explored and exploited [the SCS islands] and relevant waters, and the first to have exercised sovereignty and jurisdiction over them continuously, peacefully and effectively,” according to the Chinese Foreign Ministry.

But by refusing to submitting to arbitration and halting its construction activities, it is very likely that China, as with past and present great powers, will merely ignore international law since it goes against its national interests.

Effects of an increasingly contested waters

China’s island-building efforts also come with devastating environmental casualties. A large area of coral reefs — some of the most biodiverse in the world — have been destroyed by this island-building scheme. Poaching of endangered species have become unabated since the Philippine Coast Guard appears powerless to implement the country’s fisheries laws. There have also been several reports of Chinese harassment of Filipino fishermen and hindrance of small-scale and large-scale fishing, as well as Philippine oil exploration. On the other hand other powers such as the United States and Japan have come to meddle in the issue as the area is tied with their national and economic interests, making the South China Sea an increasingly volatile area for the actual claimant states such as the Philippines but are too weak to stand up for themselves on the military front. The issue also has exposed yet again how overdependent and shackled the Philippines has become to its “ally”, the United States, over the past 70 years since it has “granted” the Philippines its “independence”.

A closer look on the SCS’s “hydrocarbon factor”

Why the South China Sea is fiercely contested is fairly obvious. With the population of countries around South China Sea increasing, the sea is becoming an important source of food especially for the coastal areas. The sea also serves as the source of livelihood for fishermen from the countries that surround it. More importantly, the South China Sea serves as a major shipping route where, according to the Center for Strategic and International Studies, $5.3 trillion worth of annual trade passes through. But what the media has often indicated and emphasized is the presence of substantial energy reserves in the region, the “hydrocarbon factor”, despite the lack of credible evidence.

All of the claimant parties to the SCS are experiencing present and worsening energy security concerns due to their rapid industrialization. This, partnered with the countries’ decreasing domestic production rates, provides enough motivation to look for and develop energy resources “closer to home”, as the SCS is reported to be littered with.

The publicly available numbers concerning the sea’s hydrocarbon factor are varying, and highly optimistic. Chinese estimates go as large as 213 billion barrels of untapped oil in the SCS. These exaggerated estimates are largely due to misinterpretation and an oversimplification of oil terminology. There is the widespread inclination to bulk “oil” and “gas” together under the heading of “energy”, resulting in an incorrect, blown up resource potential. Natural gas, while present in amounts much larger than crude oil and may as well be used as fuel, does not have the capacity to substitute petroleum in the long term; factors such as storage and distribution reduce the performance of gas as transport fuel. Therefore, mixing up the two terms will end up with a larger estimate, and a longer duration of consumption than actual.

Estimates often include both “conventional” and “unconventional” resources of oil and gas. “Conventional” resources comprise most of the fuel in the current supply market, and are the cheapest, the easiest to develop, and the relatively most environmentally-friendly, having smaller carbon footprints compared to “unconventional” resources. The latter is composed of resources that are harder to access and develop, and face several technical barriers that are yet to be overcome. Although “unconventional” resources do not necessarily inflate resources, they are still included even with their current inaccessibility, therefore the credibility of estimates being floated in the media is put in the question.

It is also important to note that public estimates measure resources, and not the more important reserves. Resources refer to the total amount of hydrocarbons on site, while reserves are the fraction of resources that may be commercially extracted given the current factors, such as technical capability. The Chinese resources estimate of 213 billion barrels converts into just about 75 billion barrels in terms of reserves.

Even this is still a very optimistic estimate, as it may include “unconventional” resources and/or a combined measurement of oil and gas. There is a clear lack of reliable data available to the general public, and leaves us to conclude from limited information, such as seabed sediment thickness to locate hydrocarbon provinces.

How credible an argument is the hydrocarbon potential?

The presence of hydrocarbon is dependent on three key elements: (1) a porous, permeable sedimentary reservoir, (2) an organic rich source rock and (3) a low permeability capping rock. These elements are mostly present in areas near mainland and island shores, or are primarily onshore. Eight of the nine known hydrocarbon provinces in the SCS are included in competing claims, but because of being in marginal areas, most of them are only partially in dispute.

Large parts of the SCS in contest, however, is composed of oceanic crust, an igneous rock. The presence of oil and gas in these areas can be ruled out. The famous Scarborough Shoal’s proximity to the centre of the oceanic crust rules out the “hydrocarbon factor” as a reason for dispute over that rock. In several other contested areas with having high sediment thickness, the lack of data concerning the presence of rich organic rock or a capping rock may also cause the “hydrocarbon factor” to be ruled out, until further exploration be conducted.

Owen and Schofield (2011) determined the capability of the SCS to better the energy securities of claimant parties. By only using publicly-available data, they created models of production and depletion curves of each country to analyze the long-term hydrocarbon potential of the SCS, with the assumption that each country party to the dispute will own all of the disputed areas at a given model. Their analysis shows that China’s and Southeast Asia’s escalating concerns on energy security cannot be fully solved by relying on oil and gas extraction from the SCS alone. Their models also show that the reserves will not be able to reverse the trend for the countries’ dependency on far-sourced hydrocarbon imports in the long run. Notably, they highlighted that China’s demand for oil and natural gas cannot be satisfied even if it gains the whole area of contention under its control.

The real cause for the SCS dispute?

The gravity of the “hydrocarbon factor” in the SCS maritime and territorial disputes must be put in perspective. Although hardly sustaining energy securities of countries, even modest amounts of natural gas and oil are still valuable, and is enough reason for claimant parties to contest over the SCS since it is “nearby”.

The dispute over the SCS can be better understood when considering other resources other than gas and oil. Fisheries (read: food security) and raw sovereignty over territorial lands must be further regarded in the SCS dispute. Claimants’ — especially China’s — efforts of bettering their sea-lane security must also be accounted for.

Not only a game of the diplomats

Tensions among China and Southeast Asian countries are escalating due to the contest over the South China Sea, a rich waterway valuable for several reasons. With the recent ruling of the Hague Tribunal against China’s claims on the sea, bilateral talks between concerned parties are more necessary than ever, pinned on the assertion of Philippine interests and without the meddling of non-claimants such as the United States.

Media coverage of the issue should also be more educated, backed with reliable information from resource estimation experts in order to have a better representation of the issue to the general public. This is an issue that concerns the people, and well-informed people make better citizens of a nation.

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