Mideast Oil Drives China Disputes

Import reliance raises stakes in the South China Sea.
By Michael Lelyveld
2011-07-18
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China's energy giant CNOOC director Yang Hua (C) speaks with Iraqi Oil Minister Hussain al-Shahristani (R) and a Turkish official after signing an oil deal in Baghdad, May 17, 2010.
China's energy giant CNOOC director Yang Hua (C) speaks with Iraqi Oil Minister Hussain al-Shahristani (R) and a Turkish official after signing an oil deal in Baghdad, May 17, 2010.
AFP

China's heavy dependence on Middle East oil will continue to spur frictions with neighboring countries in the South China Sea, experts say.

Recent disputes with Vietnam and the Philippines about overlapping border claims have focused on rights to explore for oil and gas in offshore areas.

But relatively little attention has been paid to the large volumes of China's existing oil supplies that flow through the disputed waters of the South China Sea.

A Radio Free Asia review of China's customs data found that nearly half of the country's imported oil has come from the Middle East and North Africa this year. The proportion rises to nearly 80 percent with the inclusion of other African sources such as Angola and Sudan.

All of that oil threads through the narrow Strait of Malacca by tanker before crossing the South China Sea on its way to Chinese ports.

Detailed customs data through May suggests that some 2.8 million barrels per day may be sailing through the contested areas. That would be about 30 percent of China's total oil demand, based on Reuters estimates.

While the United Nations Law of the Sea Convention calls for freedom of navigation, the vital traffic gives the People's Liberation Army Navy (PLAN) a strategic motive to expand its presence on the route, whether new oil is discovered or not.

"Who controls those sea lanes, currently controlled by the U.S. Navy, is becoming a very important issue to China's strategic planners," said Mikkal Herberg, research director for energy security at the Seattle-based National Bureau of Asian Research.

"This helps explain at least one important reason why China is working very diligently to expand its naval capabilities, including surface ships, submarines and a new submarine base on Hainan Island," Herberg said.

Contentious

ChinaOilRoute071811-600.jpg

It may also explain why disputes have grown so contentious in exclusive economic zones of Vietnam and the Philippines, where China has asserted historical sovereignty claims.

Countries of the region have played up the potential bonanza of energy that may be found in South China Sea for years, but few commercial reserves have been proven so far.

"The decades-old claims have become more urgent with China's emergence as a major trading nation, ever more dependent on international shipping routes that extend from the waters of East Asia to the Middle East," wrote Carlyle Thayer in YaleGlobal Online Magazine.

"China, once self-sufficient in energy resources, now imports oil and its dependency on imports of natural gas will grow markedly over the next two decades," said Thayer, an emeritus professor at the Australian Defense Force Academy, University of New South Wales.

In May and June, tensions rose to new heights after Chinese boats interfered with Vietnam's seismic surveys in an area some 120 kilometers (80 miles) from its coast and 600 kilometers from Hainan Island.

The Philippines also protested a series of Chinese incursions in its zone since February. After an initial furor, China sought to calm the situation, pledging to resolve differences through peaceful dialogue.

In the latest incident last week, a Vietnam border official told the Associated Press that armed Chinese sailors boarded a Vietnamese fishing vessel and beat its crew members on July 5 near the disputed Paracel Islands.

Ominous warnings

At a regular press briefing on July 14, China's Foreign Ministry spokesman Hong Lei said disputes should be resolved through "direct negotiations."

But Beijing's messages have been mixed with ominous warnings to both its immediate neighbors and the United States, which maintains a strategic presence and alliances in the region.

"I believe the individual countries are actually playing with fire, and I hope the fire will not be drawn to the United States," China's Vice Foreign Minister Cui Tiankai told reporters in June.

In addition to China, Vietnam and the Philippines, parts of the South China Sea are claimed by Malaysia, Brunei and Taiwan.

The issue became a major topic of meetings between Adm.
Mike Mullen, chairman of the U.S. Joint Chiefs of Staff, and his PLA counterpart Gen. Chen Bingde in China earlier last week.

Both commanders stressed the benefits of increased military-to-military cooperation.

Adm. Mullen called the relationship "absolutely vital,"
adding, "I can't think of another place where there's more to be done, and more to be gained than between the United States and China."

But Gen. Chen's comments on the South China Sea issue made clear that tensions remain.

At a press conference, Chen complained three times about joint U.S. naval maneuvers with countries in the region, including Australia, Japan and the Philippines, according to The New York Times.

Chen appeared to reject Adm. Mullen's assurance that the maneuvers had been scheduled long in advance. "At the least, this is bad timing," he said, later adding that "it's not that difficult a thing to change a schedule."

On Friday, U.S. naval vessels began a weeklong series of joint exercises with Vietnam. U.S. officials stressed that the "noncombatant" drills had been planned for months, The Wall Street Journal reported.

Naval frictions

Herberg said China's oil imports from Mideast and African sources make continued naval expansion and frictions likely in the South China Sea, regardless of prospects for new oil development.

As China's imports have grown over the years, the proportion of Middle East oil has remained relatively unchanged.

"They've made very little progress in diversifying and over the last four or five years, it's pretty consistent," he said, "Half of their oil is coming from the Middle East and roughly 30 percent from Africa, mainly West Africa."

"There are not very many good options," said Herberg, noting that new overland pipelines from Kazakhstan and Russia may provide some 700,000 barrels per day. The new routes are not enough to cover China's rising demand, which has grown by nearly 500,000 barrels per day every year.

As China's demand continues to climb, the proportion coming from Mideast and African sources is likely to rise, increasing strains over South China Sea control.

"I think that will be a continuing source of tension,"
said Herberg.

"Even if they were to settle all the territorial claims, there's still the issue of this lifeline of Chinese crude oil imports becoming increasingly critical to their economic prospects," he said.



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