Cautious progress on disputes affecting China seas exploration

Oct. 1, 1998
Location of the Spratlys in the South China Sea. [63,507 bytes] Economic events in the Far East have put the region's continuing territorial disputes into the shade. However, two of these disputes are significant, as they have hampered exploration in parts of the East China Sea and South China Sea. Diplomatic attempts to break the impasse of late have not been entirely futile. Progress was outlined this summer at the "Borderlands Under Stress" conference at the UK's Durham University

Sovereignty issues continue to fester

Economic events in the Far East have put the region's continuing territorial disputes into the shade. However, two of these disputes are significant, as they have hampered exploration in parts of the East China Sea and South China Sea.

Diplomatic attempts to break the impasse of late have not been entirely futile. Progress was outlined this summer at the "Borderlands Under Stress" conference at the UK's Durham University organized by the International Boundaries Research Unit.

Both sovereignty issues center around a group of small, uninhabited islands of which the Spratlys have been more publicized. This is due to the brief naval conflict in the area between Viet nam and the People's Republic of China (PRC) in 1988, followed by the PRC's award of hydrocarbon exploration rights in these water to Crestone Energy (to Vietnam's disgust).

Others contending Spratlys ownership are Brunei, Malaysia, and The Philippines. Their strategy seems to have oscillated between occupation and negotiation. According to Liselotte Odgaard of Aarhus University's Depart ment of Political Science, this behavior has heightened the general uncertainty in South East Asia at present.

However, a framework for a new security order in the Spratlys region is unfolding, she argued in her paper. Whether this will lead to multilateral oil and gas exploration remains to be seen.

The surrounding maritime space is what is most sought after, not just for its unknown quantities of oil, gas and minerals, but because the sea lanes west of the islands link the Indian and Pacific Oceans. Jurisdiction over this space is regulated by the United Nations Con vention on the Law of the Sea (UNCLOS).


But, as Odgaard pointed out, UNCLOS' application assumes that a particular state has undisputed title over territory from which the maritime zone is claimed. However, territorial sovereignty merely requires that state to demonstrate an ability to administer the territory. This interpretation has led to the claimant states effectively embarking on a policy of occupation of the Spratlys.

In 1995, that policy escalated when the People's Republic of China (PRC) acquired Philippines-claimed Mischief reef. In return, the Philippines landed civilians and military personnel on Scarborough Reef in 1997. These provocations set a dangerous precedent, Odgaard said, as no formal non-aggression pact covering such skirmishes has been devised between the PRC and other Southeast Asian states.

The Association of Southeast Asian Nations (ASEAN) was formed in 1967 implementing a policy of non-interference in the domestic affairs of neighboring states. This has insured that disputes do not spill over into military conflict. However, the PRC does not subscribe to the region's security arrangements.

The PRC's preoccupation with safeguarding its territorial integrity from foreign invasion dates back even before the rise of Communist China, Odgaard said, and the Spratlys happen to be the PRC's, as well as South East Asia's, first line of defense.

Deterrence, reassurance

In the post-Cold War Era, the governance structure taking shape in this region combines deterrence with reassurance. The US remains a pillar of the SE Asian deterrence structure as a military balancer, but it will not get involved in disputes such as the Spratlys, as evidenced by the US' refusal to give The Philippines military assistance over the 1995 incident.

This non-interference is likely to be maintained, Odgaard claimed, although following the PRC's buildup of forces in the South China Sea of late, Brunei, The Philippines, and Thailand have offered the US increased military cooperation. Buildup of navies and air forces in the region, however, have been halted by the economic crisis.

The PRC could feel increasingly isolated by this emerging situation. Hence, the steps taken by the US towards rapprochement with the PRC, including high level exchange between the two states' military structures. This is what Odgaard was referring to as "reassurance."

Pooling of resources

However, constraining use of force will not alone insure development of the Spratlys' hydrocarbon resources. The most feasible way forward, Odgaard suggested, might be a model of cooperation based on pooling of the various nations' resources in a way that is seen not to infringe on anyone's alleged rights.

An UNCLOS definition of a semi-enclosed sea can be loosely applied to the South China Sea. Article 123 requires bordering states of such a sea to "cooperate with each other in the exercise of their rights and in the performance of their duties under this Convention." Using UNCLOS provisions may provide a breakthrough for cooperation in the Spratlys, Odgaard said.

Several joint agreements relating to hydrocarbon prospecting have held together in South East Asia, namely between Malaysia and Thailand, Malaysia and Vietnam, and in the Timor Gap (Australia, Indonesia). An attraction of a joint development area is that it appears to postpone resolution of the sovereignty issue, which is the key barrier to settling the Spratlys dispute. However, applying this model requires mutual confidence that no party will re-assume decisionmaking authority at a later date, which cannot be guaranteed in the Spratlys' case.

The PRC has demanded recognition of its sovereignty over the South China Sea in return for accepting a model of joint development. It expects these rights to be acknowledged, even if it does not actually implement them, but these demands remain unacceptable to the other claimant states.

Inability to agree on a joint settlement is what has held up hydrocarbon exploration in the area, which requires long-term participation by foreign oil companies. Odgaard said. Only The Philippines, the PRC, and Vietnam have at tempted drilling in these waters. What is needed is an organizational framework through which interstate confidence may be achieved, and that in turn means institutionalization of interstate cooperation through diplomatic means. But that approach toward a long-term commitment also conflicts, in the PRC's eyes, with its own preference for an independent foreign policy. The PRC is unwilling, said Odgaard, "to risk entanglement in negotiations where she expects to find herself in a minority position."

Conflict resolution

In an attempt to ease these barriers towards negotiation, workshops on managing potential conflicts in the South China Sea were initiated in 1990, with the PRC participating in 1991. While achieving few solid results, they have at least broken ground in allowing states' different points of view to be aired, said Odgaard, forcing claimants to recognize actual differences of opinion rather than just ignoring them.

Technical working groups have now been established for protection of the marine environment and safety of navigation, shipping, and communication, which have addressed potential opportunities for cooperation (regional marine pollution monitoring network; biodiversity studies).

Most of the technical workgroups' proposals remain to be implemented, but at least the dialogue seems to be moving away from controversial security issues, said Odgaard. In the long term, she added, constructive interaction such as this may be a more effective way of preventing conflict than direct confrontation over boundary issues.

However, for exploration and production activity to resume unhindered, states must agree on a definition of mutually acceptable behavior that is in accordance with international law. So far that will has been lacking, due to the weak political framework between the PRC and South East Asia, hence the myriad of arguments put forward by the various claimants on the maritime space. In other words, they have applied international law only in so far as it advances their own individual interests in this region, rather using it to find a solution acceptable to all the states.

ASEAN input

ASEAN has recognized the problem and has called on all parties concerned to establish an international conduct over the South China Sea as a formal mechanism for conflict management. A joint statement by ASEAN heads of state and the PRC's president in 1997 suggested what a future code of right and wrong conduct might comprise. It said that the most fundamental norms guiding relations would be respect for each other's independence, sovereignty, and territorial integrity, and the principle of non-interference in the internal affairs of other states.

These commitments are a step towards mutual acceptance that both sides must accommodate each other's conceptions of international justice, Odgaard said. That in turn has engendered realization of the need to reconcile different practices in the interest of regional peace and stability. By establishing an informal dialogue, the nations may have moved some way towards initiating a framework for joint oil and gas development around the Spratlys.

East China Sea scuffles

Further north in the China Seas, the sovereignty dispute between Japan, the PRC, and Taiwan over the Diaoyu/Senkaku islets at the sea's eastern edge involves 500-year old claims which impact potential offshore oil activities. Sovereignty over the islets could affect 71,140 sq km of the surrounding continental shelf, according to Daniel Dzurek of Washington-based International Boundary Consultants.

The most recent incident occurred this June, when protesters from Hong Kong and Taiwan in five boats challenged 50 Japanese Maritime Safety Agency (MSA) ships near the islets. In the chase that followed, the Hong Kong vessel sank. The Chinese protesters claimed it had been rammed, while Japan countered that the boat had been scuttled. Both sides then restated their claims, with the PRC Foreign Ministry announcing that "the Japanese side will be held responsible for the consequences."

Diaoyu/Senkaku are volcanic islets and rocky outcrops covering a land area of 7 sq km, the largest of which lies 170 km northeast of Taiwan and 410 km west of Okinawa. All the features lie within the 200-meter isobath at the edge of the Asian geologic continental shelf. They are separated from the nearest undisputed Japanese islands by the 2,270 meter deep Okinawa trough.

In 1996, the PRC and Japan adopted legislation claiming jurisdiction out to a maximum of 200 nautical miles from their respective boundaries, as well as delimiting straight baselines. At the same time, scuffles between groups of protesters from the two nations intensified, including various attempts at occupying the islets.

Tensions appeared to cool in July 1997 when Taiwan's president Teng-hui announced that Japan had agreed to allow Taiwanese boats to exercise fishing rights in waters near the disputed islets. Later that year, a provisional fisheries agreement for the East China Sea was signed in Beijing by the PRC and Japan. That included joint management of an area lying beyond 52 nautical miles from their respective shores. But that zone also extended into the area potentially affected by an equidistant line drawn from the Diaoyu/Senkaku islets. Taiwan then declared that it would not accept the fisheries accord as it infringed on its own sovereignty claims.

Meantime, Chinese survey vessels continue to probe the nearby areas while Japan renews its sovereignty claims periodically. Early in June 1998, the PRC started exploring the Pinghu oilfield from a rig in the central East China Sea. Although this is on the PRC's side of the hypothetical median line, it shows that the quest for the sea's offshore deposits will extend out further. Dzurek said "without settled boundaries, the potential for conflict will increase."

The dispute over the islets had swelled in 1970 following identification of petroleum deposits under the sea by a UN report. At that time, Dzurek said, the Law of the Sea stressed natural prolongation in determining jurisdiction over the continental shelf. Owning the islets would have allowed Japan to leap over the Okinawa Trough, thereby gaining a secure base from which to claim the mainland shelf area. But when Japan and Taiwan began offshore leasing, their related overlapping claims and sovereignty disputes became obvious.

Japan alleges it discovered the Senkaku islets in 1895, incorporating them as part of Okinawa - unchallenged by China. Japan added that development of the islets by Japan up to World War I and under US administration subsequently validates its claim. However, the PRC claims to have discovered the islets in 1372, incorporating them into its maritime defenses in 1556, and only ceding them by treaty to Japan following the 1894-95 Sino-Japanese War. Following various World War II declarations, they should have subsequently been returned, the PRC argues.

Today's dispute centers on whether the islets were free to be taken in 1895, on Japan's method of obtaining control and on whether they were traditionally associated with Taiwan or Okinawa, and also the implication of the 1970 Ryukyu Reversion Agreement between the US and Japan. That returned the Rikukyu (Okinawan) and Dato islands to the Japanese administration.

The US specified that this agreement did not affect determination of sovereignty over the Diaoyu/Senkaku islets, which are within the polygon delimiting the returned territory. However, their inclusion within the Ryukyu geographic definition clearly supports Japan's contention that they were associated with Okinawa, Dzurek said.

Pre-1970, the islets were barely mentioned in official treaties, as they had little value until offshore oil exploration began in the East China Sea in the 1970s. Following this activity, the claimants reached a modus vivendi which shelved the sovereignty issue, until recently. Japan exercised restraint by not including the islands in its straight baseline claims. However, the protests this June suggest sovereiegnty issues will continue to fester, said Dzurek, inhibiting outright exploration of hydrocarbons in this area.

The most practical solution, he argued, might be to discount the jurisdictional effect of the disputed islands. "Ultimately, the legal niceties are less important than the political will and motives of the claimants. If they really want the oil and fish, they will find some way to reach an accommodation."

Copyright 1998 Oil & Gas Journal. All Rights Reserved.