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| Fig. 1: Competing territorial claims in the South China Sea as of 2012. [7] The Nine-Dash Line is labeled as "H". (Courtesy of the DOD) |
Territorial and sovereignty disputes throughout the South China Sea have persisted for decades and have largely intensified over time. (For a modern map of disputes, see Fig. 1.) While many of these disagreements and conflicts spawn at least partially out of contrasting historical claims to the lands and waters, there is reason to consider the influence of oil possibilities in the region as playing a key role in the rising tensions. Should the contested waters of the South China Sea possess oil reserves that could be technologically and economically feasible to extract, rivaling states likely have an increased motive for active attempts to secure such territories.
Modern oil and gas estimates are inherently uncertain. [1] Many estimates rely on inflexible models and/or data from various countries and companies utilizing unstandardized definitions and methods, which introduces error that is difficult to minimize. Furthermore, political motivations make it difficult to discern governments who may posses unique, large, trustworthy datasets from those governments over or underestimating oil and gas reserves for political gain. Furthermore, estimates for hydrocarbons in offshore basins generally improve with more exploration and sampling. Much of the South China Sea remains under-surveyed, so estimates for hydrocarbons in the region will continue to change and improve over time as new data is introduced into the public sphere.
In 2010, the US Geological Survey released what is widely considered the most authoritative hydrocarbon resource estimate for Southeast Asia. [2] This report suggests the South China Sea likely holds between 1.4 billion and 5 billion barrels of oil. [3] This study states a 95% chance of at least 750 millions barrels of oil in the South China Sea platform, a subsection of the South China Sea which is, as of November 2023, still considered non-territorial, international waters, despite being claimed by multiple countries. These estimates agree with a larger USGS survey which suggests the mean probable volume of oil resources is about 2.5 billion barrels of oil. [4] Of the 9 provinces of the South China Sea used in these surveys, only one is not currently disputed territory.
How much oil is this? We could consider this in contexts of global oil resources, but let us instead consider how much oil per day might be extracted relative to global daily production.
First, we wonder at what rate could oil reasonably be extracted from these resources. We can rely on the extensive research concerning oil field depletion rates to examine a reasonable daily production volume of oil and compare to current Chinese daily oil production. Namely, Höök et al. (2014) provides an analysis of peak depletion rates (how much of the recoverable resources is being extracted annually) for oil fields based on size. [5] This study found that most oil fields over one billion barrels peak at a depletion rate of about 5%. (see Fig. 9 in Höök et al. [5]) If we assume this rate using the mean assumed resources (2.5 billion barrels), then we find an annual production of (2.5 billions barrels) × (0.05) = 125 million barrels of oil. Then, we find a maximum daily production rate around 340 thousand barrels of oil. This further corresponds with Höök et al. which revealed oil fields of this size reliably reach a maximum daily oil production on the order of 105 barrels per day. Chinese daily production of oil in 2022 was 3994 thousand barrels. [6] Hence, if China were to control the entire oil reserves of the South China Sea, this could increase its production over its 2022 mark by about 8.5%. Chinese daily oil production has remained rather steady between 3800 and 4300 thousand barrels for the last 10 years, suggesting that this bump, while not undesirable, does not necessarily move them into the "big leagues" of oil producers such as Russia, Saudi Arabia, and the US who are all consistently producing more than 10,000 barrels of oil per day. [6]
These numbers present some insight into the value of potential oil reserves in the South China Sea. Similar analyses of USGS data and other US estimates for South China Sea oil reserves have led some analysts to claim that oil may not be a major solution for Southeast Asia's energy security challenges and hence disputes in the region are likely due to a variety of compounding factors, not just a fight over oil. [2]
© Ky Friedman. The author warrants that the work is the author's own and that Stanford University provided no input other than typesetting and referencing guidelines. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.
[1] C. E. McGlade, "A Review of the Uncertainties in Estimates of Global Oil Resources," Energy 47, 262 (2012).
[2] N. A. Owen and C. H. Schofield, "Disputed South China Sea Hydrocarbons in Perspective," Mar. Policy 36, 809 (2012).
[3] "Assessment of Undiscovered Oil and Gas Resources of Southeast Asia," U.S. Geological Survey, Fact Sheet 2010-3015, June 2010.
[4] "An Estimate of Undiscovered Conventional Oil and Gas Resources of the World," U.S. Geological Survey, Fact Sheet 2012-3042, March 2012.
[5] M. Höök et al., "Decline and Depletion Rates of Oil Production: A Comprehensive Investigation," Philos. Trans. R. Soc. A 372, 20120448 (2014).
[6] "BP Statistical Review of World Energy 2022," British Petroleum, June 2022, p. 15.
[7] "Annual Report to Congress," U.S. Department of Defense, DIA-02-1109-276, May 2012, Appendix 4.