South China Sea - Oil Background
South China Sea - Oil Background
Background
The South China Sea is rich in natural resources such as oil and natural gas. The South China Sea encompasses a portion of the Pacific Ocean stretching roughly from Singapore and the Strait of Malacca in the southwest, to the Strait of Taiwan (between Taiwan and China) in the northeast (see the footnote for a more precise definition). The area includes more than 200 small islands, rocks, and reefs, with the majority located in the Paracel and Spratly Island chains. Many of these islands are partially submerged islets, rocks, and reefs that are little more than shipping hazards not suitable for habitation; the total land area of the Spratly Islands is less than 3 square miles. The islands are important, however, for strategic and political reasons, because ownership claims to them are used to bolster claims to the surrounding sea and its resources.
Map - South China Sea
The South China Sea is rich in natural resources such as oil and natural gas. These resources have garnered attention throughout the Asia-Pacific region. Asia's economic growth rates have been among the highest in the world, and this economic growth will be accompanied by an increasing demand for energy. Between now and 2025, oil consumption in developing Asian countries is expected to rise by 3.0 percent annually on average, with more than one-third of this increase coming from China alone. If this growth rate is maintained, oil demand for these nations will increase from about 15.1 million barrels per day in 2002 to nearly 33.6 million barrels per day by 2025.
Much of this additional demand will need to be imported from the Middle East and Africa. Excluding cargoes bound for South Asia, most of this volume would need to pass through the strategic Strait of Malacca into the South China Sea (see Figure 1). Countries in the Asia-Pacific region depend on seaborne trade to fuel their economic growth, and this has led to the sea's transformation into one of the world's busiest shipping lanes. Over half of the world's merchant fleet (by tonnage) sails through the South China Sea every year. The economic potential and geopolitical importance of the South China Sea region has resulted in jockeying between the surrounding nations to claim this sea and its resources for themselves.
Source: USDOE