“Sovereignty disputes are complex and hard to resolve. No side can easily abandon their claims without high political costs,” Singapore’s Prime Minister Lee Hsien Loong said in a speech in early September in Beijing, and the only real surprise is that he wasn’t talking about the rising tension between China and Japan over the Diaoyu or Senkaku islands in the East China Sea.
No, PM Lee was talking about what now seems the quaint frictions between China and two of its southern neighbors over competing claims in the South China Sea. Those David-and-Goliath battles have now been pushed aside by the suddenly fraught diplomatic tiff over the Diaoyu-Senkaku island cluster about 116 miles (186 km) northeast of the port city of Keelung, Taiwan. At least from a distance the more southern dispute never seemed to have the explosive potential that’s been exhibited over the “barren rocks” — as Wikipedia has it — of Diaoyu-Senkaku.
The interesting thing about that is the standard explanatory note that it’s really all about the oil and the gas — and in truth, whole articles are sometimes written about the China-Japan dispute without mentioning a single hydrocarbon — is less easy to swallow than it is for the South China Sea.
The Paracel and Spratly islands and the Scarborough Shoal and other rocky atolls under dispute in the South China Sea are surrounded by oil and gas production: offshore China’s Hainan island; the north and east coast of Vietnam; the western shores of the Philippines, and off East Malaysia and Brunei. And while estimates that there may be as much as 225 billion barrels of oil equivalent underneath this larger body of water might be a bit optimistic, it’s an easier argument to make that there are significant resources beneath South China Sea waves than that similar sized reserves could reasonably be expected in the East China Sea.
In the East China Sea, China has estimated there may be as much as much 160 billion barrels of oil and 210 Tcf of gas, although other estimates run lower. None of the figures mentioned in a US Energy Information Administration report in 2008, however, really jive with an interim report from state-owned CNOOC that shows 300,000 barrels of crude oil and liquids and 6 Bcf of gas produced from East China Sea licenses in the first six months of the year. That’s out of CNOOC’s total domestic output of 105 million barrels of crude oil and liquids and 118.1 Bcf of gas. In short, practically nothing.
As well, other oil companies don’t have much faith in the potential of the region. In 2004, Shell and the then Unocal pulled out of contracts to explore for natural gas in the Xihu Trough to the northwest of the Diaoyu-Senkaku islands in the East China Sea, saying that the resources weren’t commercial. The record of futility in the area goes back further, with Taiwan and Japan not having made any significant finds onshore or offshore after spending decades looking for oil and gas resources since the 1970s. The closest significant oil and gas fields of any size lie further to the north and to the west in China’s Bohai Bay.
Not really what one would consider highly prospective territory then.
What that means is that the dispute over the barren rocky outcroppings in the East China Sea likely has nothing to do with oil and gas, and thus there is no potential commercial gain that might eventually bring China and Japan together in the interest of the mutual economic benefit of jointly exploiting much-needed hydrocarbon resources.
And what that means is that as long as each country is claiming that the Diaoyu-Senkaku islands are an “integral part” of its territory, periodic eruptions of anti-Japan protests in China and disruption to Japanese businesses there is what can be seen ahead.
“It is important that both countries behave themselves from a comprehensive point of view. We hope that the current situation does not prevent Japan-China relations from developing steadily, and we would like to ask the Chinese side for cool and appropriate responses,” a spokesman for Japan Ministry of Foreign Affairs wrote in an e-mail early this week.
Right now and into the immediate future, “cool and appropriate responses” from either country seem about as wishful as hoping that there are vast oil and gas reserves for the taking in the East China Sea if only these pesky and complex territorial disputes could be resolved.