"The EIA estimates are far below those of the U.S. Geological Survey, which calculates that the South China Sea may contain roughly 28 billion barrels of oil, even as the Chinese government calculates that the South China Sea region contains nearly 200 billion barrels of oil...."
The South China Sea is a critical world trade route and a potential source of hydrocarbons, particularly natural gas, with competing claims of ownership over the sea and its resources.Stretching from Singapore and the Strait of Malacca in the southwest to the Strait of Taiwan in the northeast, the South China Sea is one the most important trade routes in the world. The sea is rich in resources and holds significant strategic and political importance.
The area includes several hundred small islands, rocks, and reefs, with the majority located in the Paracel and Spratly Island chains. Many of these islands are partially submerged land masses unsuitable for habitation and are little more than shipping hazards. For example, the total land area of the Spratly Islands encompasses less than 3 square miles.
Several of the countries bordering the sea declare ownership of the islands to claim the surrounding sea and its resources. The Gulf of Thailand borders the South China Sea, and although technically not part of it, disputes surround ownership of that Gulf and its resources as well.
Asia's robust economic growth boosts demand for energy in the region. The U.S. Energy Information Administration (EIA) projects total liquid fuels consumption in Asian countries outside the Organization for Economic Cooperation and Development (OECD) to rise at an annual growth rate of 2.6 percent, growing from around 20 percent of world consumption in 2008 to over 30 percent of world consumption by 2035. Similarly, non-OECD Asia natural gas consumption grows by 3.9 percent annually, from 10 percent of world gas consumption in 2008 to 19 percent by 2035. EIA expects China to account for 43 percent of that growth.
With Southeast Asian domestic oil production projected to stay flat or decline as consumption rises, the region's countries will look to new sources of energy to meet domestic demand. China in particular promotes the use of natural gas as a preferred energy source and set an ambitious target of increasing the share of natural gas in its energy mix from 3 percent to 10 percent by 2020. The South China Sea offers the potential for significant natural gas discoveries, creating an incentive to secure larger parts of the area for domestic production.
Reserves and resources
EIA estimates the South China Sea contains approximately 11 billion barrels of oil and 190 trillion cubic feet of natural gas in proved and probable reserves. Conventional hydrocarbons mostly reside in undisputed territory.It is difficult to determine the amount of oil and natural gas in the South China Sea because of under-exploration and territorial disputes. Most current discovered fields cluster in uncontested parts of the sea, close to the shorelines of the coastal countries. EIA estimates there to be approximately 11 billion barrels (bbl) of oil reserves and 190 trillion cubic feet (Tcf) of natural gas reserves in the South China Sea. These numbers represent both proved and probable reserves, making them closer to a high-end estimate. Energy consultancy Wood Mackenzie, for example, estimates the sea to contain only 2.5 billion barrels of oil equivalent in proved oil and gas reserves....MOREContested territorySpratly Islands EIA estimates the region around the Spratly Islands to have virtually no proved or probable oil reserves. Industry sources suggest less than 100 billion cubic feet (Bcf) in currently economically viable natural gas reserves exist in surrounding fields. However, the Spratly Island territory may contain significant deposits of undiscovered hydrocarbons. USGS assessments estimate anywhere between 0.8 and 5.4 (mean 2.5) billion barrels of oil and between 7.6 and 55.1 (mean 25.5) Tcf of natural gas in undiscovered resources.
Evidence suggests that most of these resources are likely located in the contested Reed Bank at the northeast end of the Spratlys, which is claimed by China, Taiwan, and Vietnam. The Philippines began exploring the area in 1970 and discovered natural gas in 1976. U.S.-based Sterling Energy won the concession in 2002, and U.K.-based Forum Energy acquired the concession in 2005 and became its operator. However, Chinese objections halted further development, and the concession remains undeveloped.....