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Wednesday, June 1, 2011

China steps up drilling, intimidation


SINGAPORE — China recently launched an oil and natural gas drilling platform that may be as significant as military modernization in buttressing Beijing's claims to control most of the islands, water and seabed in the maritime heart of Southeast Asia.

Designed to withstand typhoons, the giant rig was delivered to the state-owned China National Offshore Oil Corp. (CNOOC), the country's largest offshore energy producer. The company says it plans to use the platform to start drilling in the South China Sea in July.

It has not said where, but China's Global Times said that the deepwater rig, which is taken to its destination by powerful tugs, would "help China establish a more important presence in the largely untapped southern part of the South China Sea."

It is in this zone, which includes the widely-scattered Spratly Islands, that China's sweeping South China Sea claim overlaps with those of Taiwan and four Southeast Asian states — the Philippines, Vietnam, Malaysia and Brunei.

China's increasingly assertive policy in the South China Sea dispute was underscored last weekend when Beijing rebutted a protest that it had violated Vietnam's sovereignty. Hanoi said that three Chinese marine surveillance ships had damaged the cables of a seismic survey vessels operated by PetroVietnam, the state oil and gas firm, as it worked off the coast of central Vietnam.

According to Hanoi, the clash occurred just 215 km from Vietnam's shore, deep inside its Exclusive Economic Zone. China responded by saying that the measures taken by Chinese authorities are "normal marine law enforcement and surveillance activities undertaken in territorial waters under China's jurisdiction."

China claims control over approximately 80 percent of the South China Sea, as far south as waters off Indonesia's Natuna Island and the Malaysian state of Sarawak. But so far, China has limited its unilateral oil and gas search to the northern sector, which is contested only by Taiwan.

However, China's military power is growing and demand for energy to fuel its turbo-charged economy is increasing. As a result, China is becoming more assertive in protecting its island and maritime boundary claims, and the economic resources they contain.

The Global Times, which often voices nationalistic views, said that energy-thirsty countries around the South China Sea had been tapping Chinese petroleum resources for years. It quoted Song Enlai, chairman of CNOOC's board of supervisors, as saying that the losses in oil and gas for China were equivalent to 20 million metric tons of oil annually, about 40 percent of the country's total offshore production.

"The value of the South China Sea natural resources is immense," said Zhao Ying, a scholar with the Chinese Academy of Social Sciences. "Now that technologies are available for China to tap resources there, efforts to guard its operations and deter foreign illegal exploration become meaningful and necessary."

According to Chinese officials, 180 oil and gas fields and more than 200 prospective reservoirs had been found in the South China Sea by mid-2010, with most located in water depths at between 500 and 2,000 meters.

China's Xinhua news agency said that CNOOC plans to invest $31 billion to drill 800 deepwater wells to raise its output of oil and gas from deepwater zones to the equivalent of 500 million tons of oil by 2020. This investment is expected to be spread over prospective areas in the East China and Yellow seas, as well as the South China Sea.

The new Chinese rig, the first in a planned series, was launched May 23 in a blare of publicity in the official media. It will enable China to cease being totally reliant on foreign contractors for deep-sea drilling and allow it to explore in waters up to 3,000 meters deep, six times deeper than before.

Built over the last three years at a reported cost of $923 million dollars, the rig is as high as a 45-story building. It weighs 31,000 tons and is topped by a platform 114 meters long and 90 meters wide, about the size of a standard football field. It was made by China State Shipbuilding Corp. to drill 12,000 meters below the seabed.

Noting that countries like Vietnam and the Philippines cannot find and exploit oil and gas at such depths, Lin Boqiang, director of the Center for Energy Economics Research at Xiamen University, said it was "always a first-come, first-served game when vying for non-renewable resources in disputed sea areas, as the resources are not infinite."

China and the Philippines have also been in dispute recently over offshore energy rights in the South China Sea. Manila made an official protest to Beijing, claiming that on March 2 two Chinese patrol boats harassed a Philippine vessel surveying for oil and gas in the Reed Bank, about 250 km west of the Philippine island of Palawan.

On March 25, two days after the Philippines Department of Energy had announced that the seismic survey of Reed Bank was completed, the Chinese Foreign Ministry warned that "any activities by countries or companies to explore for oil or gas in the sea waters in China's jurisdiction without the permission of the Chinese government will constitute a violation of China's sovereignty and ... will be illegal and invalid."

Whether China will use its increasingly powerful navy to protect the new rig if it is sent to the southern sector of the South China Sea remains to be seen. But the jumbo rig alone would be a potent symbol of China's rising power and influence.

It is a marine version of a Battleship Galactica. Although unarmed, any attempt by Southeast Asian military forces to restrict the rig's movement in the South China Sea would risk retaliation from Beijing.

It could also cause a pollution disaster if the rig was drilling or producing petroleum at the time, with the intervening country likely to suffer the main damage because it was far closer to the spill than China.

Michael Richardson is a visiting senior research fellow at the Institute of Southeast Asian Studies in Singapore.


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