No usable oil in disputed areas of the South China Sea?

489378An US government report on oil and gas reserves in the heavily disputed regions of the South China has concluded that there probably aren’t any.

The study concludes for the first time that the countries expecting riches under the Spratly and Paracel Islands are going to be disappointed.

Nothing but politics and nationalism?

The research was released by the US government’s Energy Information Administration (EIA). 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 almost 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. The report states:

“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.”

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.

One exception – the Reed Bank area

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.

The estimated reserves under the Reed Bank are a relative thimbleful compared with gas available in undisputed areas.

Proved or probable reserves of South China Sea 

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.

Adapted from: Bangkok Post – No usable oil in disputed areas: US
Read the EIA report: South China Sea


Categories: Mining & Energy

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8 replies


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