Dispute over energy: South China Sea

By Andrew Higgins, The Washington Post  (Sept 8, 2011)

PUERTO PRINCESA, PHILIPPINES — When China’s largest offshore petroleum producerlaunched a $1 billion oil rig this summer from Shanghai, Lt. Gen. Juancho Sabban, the commander of Philippine military forces 1,500 miles away in the South China Sea, began preparing for trouble.

The drilling platform, said China, would soon be heading in the general’s direction — southward into waters rich in oil and natural gas, and also in volatile fuel for potential conflict.

“We started war-gaming what we could do,” said Sabban, a barrel-chested, American-trained marine who, as chief of the Philippines’ Western Command, is responsible for keeping out intruders from a wide swath of sea that Manila views as its own but that is also claimed by Beijing.

Arguments over who owns what in the South China Sea have rumbled on for decades, ever since 1947, when the doomed Chinese government of Chiang Kai-shek issued a crude map with 11 dashes marking as Chinese almost the entire 1.3 million-square-mile waterway. The Communist Party toppled Chiang butkept his map and his expansive claims, though it trimmed a couple of dashes.

Today, China’s insatiable thirst for energy has injected a highly combustible new element into long-running quarrels over cartography, arcane issues of international law and ancient shards of pottery that Beijing says testify to its “indisputable sovereignty” over the South China Sea.

China, which imports more than half its oil, will nearly double its demand for it over the next quarter-century, according to the International Energy Agency in Paris. Its demand for natural gas — believed to be particularly abundant beneath an archipelago of contested islands and reefs known as the Spratlys, just west of here — is projected to more than quadruple.

With consumption soaring and the price of imports rising, China is desperate for new sources to boost its proven energy reserves, which for oil now account for just 1.1 percent of the world total — a paltry share for a country that last year consumed 10.4 percent of total world oil production and 20.1 percent of all the energy consumed on the planet, according to theBP Statistical Review of World Energy.

As a result, Beijing views disputed waters as not merely an arena for nationalist flag-waving but as indispensable to its future economic well-being.

“The potential for what lies beneath the sea is clearly a big motivator” in a recent shift by China to a more pugnacious posture in the South China Sea, said William J. Fallon, a retired four-star admiral who headed the U.S. Pacific Command from 2005 until 2007. China is wary of pushing its claims to the point of serious armed conflict, which would torpedo the economic growth on which the party has staked its survival. But, Fallon said, such a thick fog of secrecy surrounds China’s thinking that “we have little insight into what really makes them tick.”

A big factor in this uncertainty is a meshing of Chinese commercial, strategic and military calculations. Like other giant energy companies in China, the China National Offshore Oil Corp., or CNOOC, the owner of the new Chinese rig, pursues profit but is ultimately answerable to the party, whose secretive Organization Department appoints its boss.

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