Oil, Gas and the Senkaku / Diaoyu Islands Dispute  

Posted by Big Gav in , , , ,

Martin Wolf at the FT is warning that "Beijing, in its dispute with Japan, risks repeating the errors of an earlier era that led to war" as the sabre rattling over the disputed Senkaku / Diaoyu islands continues - China must not copy the Kaiser’s errors.

The latest development in the tension over the islands (and the seabed surrounding them) is an announcement by South Korea extending its air defence zone to cover the islands, overlapping the zones proclaimed by Japan and China - South Korea extends its air defence zone to overlap with China's.

The BBC says the dispute is over a range of factors, including oil and gas - Q&A: China-Japan islands row.

They matter because they are close to important shipping lanes, offer rich fishing grounds and lie near potential oil and gas reserves. They are also in a strategically significant position, amid rising competition between the US and China for military primacy in the Asia-Pacific region.
The Economist is also pondering the dispute - Who really owns the Senkaku islands?.
If possession is nine-tenths of the law, the answer is simple: Japan. It claims to have “discovered” the islands, a terra nullius belonging to no one, in 1884. In early 1895 it annexed them, shortly after Japan had defeated a weakened China in a brief war and seized Taiwan, which lies just to their south, as war spoils. One Tatsushiro Koga was licensed to develop the islands. He set up a bonito-processing station whose 200 employees also killed the once-abundant short-tailed albatross for its feathers. The Koga family’s last employees left during the second world war. Upon Japan’s defeat in 1945 control fell to the Americans, who used the islands for bombing practice. In 1972, at the end of the American occupation, the Japanese government resumed responsibility for the Senkakus.

By then, however, oil and gas reserves had been identified under the seabed surrounding the islands. China, which calls them the Diaoyu islands, asserted its claim, as did Taiwan, which is closest to the islands (and which is also claimed by China). China’s claim is vague, and is based on things such as a Chinese portolano from 1403 recording the islands. It all speaks to an earlier world in which China lay at the heart of an ordered East Asian system of tributary states—an order shattered by Japan’s militarist rise from the late 19th century. What this history tells you is not—contrary to modern Chinese claims—that China controlled the Diaoyus, for it never did.

The Diplomat has an article by Michael Turton (much repeated in the conservative press) arguing that Chinese claims to the Senkakus began shortly after oil was discovered in the area - Constructing China's Claims to the Senkaku.

An astonishing thing occurred in 1971: after decades of complete ignorance, the two Chinese governments in Taipei and Beijing both suddenly discovered that they owned the Senkaku Islands. That's right. Prior to 1971, neither government believed that it owned the Senkaku (Diaoyutai, in Chinese). Maps and texts from both governments during the period between 1895, when Japan seized the islands, and 1971, when the claim was first mentioned, have three things in common: (1) they always assign their sovereignty to Japan; (2) they refer to them using the Japanese names; and (3) they never refer to the disputed status of the islands. Simply put, there was no "dispute" over the Senkaku until after scientists raised the possibility of oil in the area in the late 1960s.

National Geographic is also pointing to oil as a factor - Why Are China and Japan Sparring Over Eight Tiny, Uninhabited Islands?.

It's all a bit bewildering—until you consider the rich natural gas deposits of the East China Sea. "Energy is clearly what's driving a lot of Chinese behavior," says Sheila Smith, a senior fellow at the Council on Foreign Relations in Washington, D.C. "They will give you a long, historical explanation of their sovereignty claim. But the idea that there are vast resources under the East China Sea just off their coast is a tremendous motivation for the intensity of their territorial dispute."

Just how much oil and natural gas is at stake, in either the South China or the East China Sea, is unclear. The territorial disputes have prevented any reliable survey. One Chinese estimate puts the oil stores in the South China waters at 213 billion barrels, an amount that would exceed the proved reserves of every country except Venezuela (296.5 billion barrels at the end of 2011) and Saudi Arabia (265.4 billion barrels). That's about ten times higher than a U.S. Geological Survey estimate from the mid-1990s—but even that lower figure puts the South China Sea's oil potential at four or five times that of the Gulf of Mexico. Similarly, China estimates that one of the world's largest natural gas deposits, containing some 250 trillion cubic feet, lies all but untapped in the East China Sea. U.S. energy analysts reckon the "proven and probable" reserves there at only 1 to 2 trillion cubic feet—much less than the Gulf of Mexico, but still considerable.

Bloomberg also has an article looking at the possible reserves of oil in play - Disputed Islands With 45 Years of Oil Split China, Japan.

China is the world’s largest energy consumer and is running out of oil because its aging onshore fields cannot keep pace with near double-digit economic growth. By the end of this decade, the country will need to import more than 60 percent of its crude compared with about 50 percent now and one third of its natural gas, according to estimates from China Petroleum & Chemical Industry Federation. ...

The sea east of China may hold as much as 160 billion barrels of oil and the South China Sea 213 billion, according to Chinese studies cited by the U.S. Energy Information Administration. The EIA says those figures are too high and has its own estimate for the East China Sea of as much as 100 million barrels.

While drilling will be needed to confirm the size of the resource and what is recoverable, China’s estimates are larger than the confirmed reserves in Saudi Arabia of 265 billion barrels and would be enough to meet the country’s needs for a century based on 2011 consumption data provided by BP Plc. Gaining control over the largely untapped areas in the South China and East China Seas would help China avoid Japan’s postwar energy model, where its security is largely staked on oil tanker supplies originating 7,700 kilometers (4,800 miles) from Tokyo in the Middle East. ...

The country is being forced to buy more from the Middle East, importing a record 35.5 million tons of crude from Saudi Arabia, its biggest supplier, in the first eight months of this year, according to data compiled by Bloomberg. The amount was 10 percent higher than the same period last year and the bill came to $29 billion.

If you poke around enough you can find claims of a CIA report saying whatever it is you would like to hear - a Japanese blogger is pointing to a CIA report back from the genesis of the dispute (hosted at Cryptome) - The CIA’s 1971 Secret Report On The Senkaku Islands Dispute.

First of all, you can find the entire CIA report on the Senkaku Islands here, should you be interested. The report was written in 1971 and then “approved for release” on May 2, 2007, which hopefully means nobody in dark suits will be knocking on my door anytime soon. Interestingly enough, that dates the release of this article to before the recent flare-ups between Japan and China, so it’s not entirely new. It does, however, bring up an interesting perspective and thus allows us to see what part of the report has come true (or not true), as well as have an idea of what may be to come. ...

In 1969, the Japanese government sponsored a survey of the underwater geology around the Senkaku Islands. At this point, there really was no thought from really anyone that the Senkaku Islands belonged to anyone but the Japanese. After the survey, they released newspaper accounts that they had confirmed an earlier UN survey saying there was possibly a lot of oil to be had.


Reminds one of the situation between Indonesia, Australia and East Timor. Just subsitute Japan, China and Taiwan. But if these islands are where the map says they are, if push comes to shove, is Japan really in any position (by itself) to be able to project the required power?

Surely, in the interests of frying the planet faster, they can come to some agreement that will speed the release of more CO2 to the mutual detriment of all the participants?

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