No useable oil in disputed areas: US

No useable oil in disputed areas: US

US says: No oil or gas under disputed South China Sea
US says: No oil or gas under disputed South China Sea

An authoritative new report on likely oil and gas reserves in the heavily disputed regions of the South China has concluded that there probably aren't any.

A map and report by the US Energy Information Administration says there is virtually no chance of finding useful gas or oil deposits under the Spratly or Paracel Island groups.

The study, certain to shock political circles in China and the Asean region, concludes for the first time that the bickering and sometimes fighting countries expecting riches under the Spratly and Paracel Islands are going to be extremely disappointed.

The research was released last week by the US government's Energy Information Administration. It says that the South China Sea area is rich in oil and gas but these "mostly reside in undisputed territory", close to each nation's shores.

As for the most heavily disputed regions of the South China Sea, the US report said:

EIA estimates the region around the Spratly Islands to have virtually no proved or probable oil reserves....
The Paracel island territory ... has no proved or probable reserves.”

The bottom line: There is nothing but politics and nationalism to gain from Beijing's claims to own virtually the entire South China Sea. China and the other five countries fighting over ownership of the region will find no economic reward.

China's infamous "nine-dotted red line" map shows Beijing's territorial claims, which intrude deeply into other nations' 200-mile limit under the UN Convention on the Law of the Sea (UNCLOS).

The EIA estimates did not cover the Gulf of Thailand, because the report was aimed at specifying hydrocarbon exploitation and likely reserves only in the vast region of the South China Sea claimed by up to six countries - China, Taiwan, the Philippines, Brunei, Malaysia and Vietnam.

"EIA's analysis shows that most fields containing discovered oil and natural gas are clustered in uncontested parts of the South China Sea, close to shorelines of the coastal countries, and not near the contested islands," the report states.

With one exception, there is little hope of finding commercial reserves of oil or natural gas beneath or near either the Spratly or Paracel Islands groups, said the EIA report.

That exception is in the Reed Bank area of the Spratlys, claimed by China, Taiwan, Vietnam and the Philippines. Manila discovered gas there in the 1970s and awarded an exploration contract to Sterling Energy in 2002. The Chinese navy has prevented any work at the site.

The report estimated that the seas under the Reed Bank could yield 2.5 billion barrels of oil and 25.5 trillion cubic feet of natural gas, a modest but exploitable amount.

By comparison, the two pipelines linking Map Ta Phut to the offshore Erawan gas field in the Gulf of Thailand have a capacity of 2.65 billion cubic feet - per day. The third, Rayong-Kaengkhoi pipeline, due to open and carry gas to the North this year will transport another 1.4 billion cubic feet per day.

In other words, the entire estimated natural gas reserves under the Spratlys would supply Thai demand for roughly eight months. The Gulf aside, estimated reserves under the Reed Bank are a relative thimbleful compared with gas available in undisputed areas.

In total, the EIA estimates that the South China Sea has about 11 billion barrels of oil and 190 trillion cubic feet of gas rated as proved or probable reserves.

The industry's main record, Oil & Gas Journal, said these levels are similar to the amount of proved oil reserves in Mexico and about two-thirds of the proved gas reserves in Europe, not including Russia.

The Reed Bank exception essentially backs the overall conclusion of the report that there is little or no exploitable hydrocarbon in the region of the Spratlys, since it lies close to Palawan Island of the Philippines.

As for the Paracels, the EIA simply writes it off, because the region "has no proved or probable reserves".

The EIA is a statistical department of the US government, charged with collecting and analysing energy information. It was formed after the "oil shock" of 1973 to give policy makers full and accurate information on domestic and worldwide energy developments.

According to Oil & Gas Journal, the EIA projects Southeast Asian domestic oil production to stay flat or decline as energy consumption rises in the region, and gas from the South China Sea may meet a significant part of future energy demand.

The EIA report said there is likely oil and gas beneath the Reed Bank, which lies just off the coast of Palawan and which the Philippines government says "is not part of the disputed territories in the Spratly Islands".

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