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Spratlys > News > English News > July 2005

Category: @News

China seen stepping up territorial claims in voracious oil quest


July 27: China may reassert its claims over several disputed oil-rich territories as it expands offshore exploration in Asia to meet insatiable energy demand, experts told a US congressional hearing yesterday.

Beijing's "growing interest in exploring disputed offshore areas could certainly impact US interests in a direct way," said Randall Schriver, a senior State Department official who handled China affairs during President George W. Bush's first term in office.

He said many of China's existing disputes were with "friends of the United States, but in some cases, with treaty allies." In the past, the Chinese military had flexed its muscle to back claims of disputed territory or resource rights with neighbours, including Japan, India, the Philippines, the then-Soviet Union and Vietnam, Schriver said.

The most recent tensions were with Japan over oil and gas reserves in the East China Sea.

Warning that the United States would not sit idly by, Schriver said "it's not inconceivable we could choose a more robust response if our ally were faced with more aggressive actions from China."

Although Beijing's huge appetite for offshore exploration resulted recently in an agreement with Vietnam and the Philippines for joint exploration in areas previously under dispute, "it may tempt China to push its claims on other disputed territories," he said.

Understandably, Schriver said, this made some in Japan feel uneasy after several recent incursions by Chinese vessels into Japanese territorial waters.

"The risk for the United States over time is energy becoming a destablising force in Asian politics (and) we are facing in Asia a very delicate 20-year period," said Mikkal Herberg, director of the Asian energy security program at the Seattle-based National Bureau of Asian Research.

He said "shoving matches" between Japan and China over the East Siberian oil pipeline and East China gas fields "are likely to worsen over time."

They were aggravated by what he called Russia's erratic policy on supplying energy to Asia as "Kremlin infighting influences policy more than rational commercial decisions.

"I think for Asia, energy is spilling over into their geo-political rivalries, which are spilling over into preventing regional energy (demand and supply) solutions," Herberg said.

Aside from China, Vietnam and the Philippines, the potentially oil rich Spratlys island chain in the South China Sea area is being claimed by Brunei, Malaysia and Taiwan. All claimants, except Brunei, station troops on parts of the archipelago.

China and the 10-member Association of Southeast Asian Nations adopted a non-binding declaration two years ago that forbids construction of new buildings on uninhabited islands in the Spratlys to prevent territorial disputes from escalating.

Herberg felt that much of the Chinese leadership saw the United States "as an obstacle" to its efforts to ensure energy security because it "has the ability to frustrate their efforts to secure their sea lanes and activities in places like Sudan, Iran."Assistant Secretary of State Anthony Wayne told the hearing that a more troubling aspect of the recent surge in overseas energy deals by China as well as India was their investments in Sudan and Iran, which he referred to as "countries that are pursuing policies harmful to global stability."

To maintain their rapid economic growth, China and India were reorienting their foreign and domestic policies and investing heavily in securing energy supplies from abroad, officials said.

China, which replaced Japan in 2003 as the world's second largest petroleum consumer after the United States, reportedly needs to boost its energy consumption by about 150 per cent over the next 15 years.

Chinese national oil companies have also stepped up overseas equity investments in oil and gas ventures in an apparent bid to reduce dependence on oil from major companies from the United States and other developed countries and limit exposure to price volatility.

This strategy of intensified acquisition of equity oil has met with considerable skepticism by some analysts, who feel the investments are unlikely to shelter China from volatility, Wayne said Herberg likened the China policy to "hoarding" oil and "destabilizing" markets, predicting that it could "feed into naval strategies, (and) sealane issues" in the Indian Ocean and South China Sea.