south china sea dispute

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What Is the South China Sea Dispute?

By , Associate Editor, Money Morning • @TaraKateClarke -

what is the south china sea dispute

A storm that's been brewing in the South China Sea for 200 years now threatens to disrupt the world financial markets.

"The plot in the South China Sea just keeps getting thicker," Money Morning Executive Editor Bill Patalon told readers on Dec. 8. "And riskier - on both sides of the dispute that keeps escalating there."

Seven nations lay claim over the region's resource-rich islands and maritime boundaries: China, Vietnam, Malaysia, the Philippines, Taiwan, Japan, and the tiny sultanate of Brunei.
Exactly what is the South China Sea dispute?

Here's a look at the history of conflict there and the UN laws that govern...

Why Is the South China Sea Important?

By , Associate Editor, Money Morning • @TaraKateClarke -

Why is the South China Sea important? At first look, the island group seems uninhabitable and worthless - but this observation would be grossly in error.

These islands sit on the edge of the most lucrative fishing area in the South China Sea. They are also on the edge of one of the most oil- and gas-rich areas yet discovered.

And the Spratlys are claimed by no less than six different countries.

"This is definitely a situation you want to watch closely," Money Morning Executive Editor Bill Patalon told readers on Dec. 8. "Any kind of a major 'incident' there will clearly have a big - and negative - impact on the world financial markets."

Here's a look at the irresistible treasures that make ownership of the South China Sea crucial...

South China Sea Dispute Could Fuel Global Energy War

By , Contributing Writer, Money Morning -

The South China Sea dispute, a fight over the 1.4 million-square-mile area crossed by one-third of world shipping routes, played out at the recently concluded Association of Southeast Asian Nations (ASEAN) summit in Cambodia among China, Taiwan, Vietnam, Malaysia, Brunei and the Philippines.

What's behind the fight is a vast quantity of oil and gas believed to lie beneath the South China Sea.

China and the other nations desperately want the energy resources beneath the South China Sea, and the dispute has caught the attention of global financial markets.

China's biggest offshore oil company, CNOOC Limited (NYSE ADR: CEO), recently updated its projection of energy assets in the South China Sea. It said the area could hold 17 billion tons of oil and 498 trillion cubic feet of natural gas.

All those resources could not be extracted, but enough could be taken out to double China's current reserves of oil and natural gas.

For its part, China's Ministry of Land and Resources says the area contains more than 40 billion tons of oil equivalent. Most of that is believed to be in the form of natural gas.

Another Chinese estimate says 2,000 trillion cubic feet of natural gas lie under the South China Sea. That would be enough gas to meet the country's needs for the next 400 years, based on 2011 consumption levels! No wonder energy-hungry China is so interested in pushing its claims in the region.

Exploration in the South China Sea has been very limited so far because few major international oil companies want to get involved in the territorial dispute. China has already successfully pressured companies like BP plc (NYSE: BP) and Exxon Mobil Corp. (NYSE: XOM) to abandon its deals with neighboring Vietnam.

CNOOC itself caused a diplomatic row with Vietnam in June when it put up for auction nine oil and gas blocks that Vietnam says are in its territory. The blocks had already been auctioned by Vietnam to companies including ExxonMobil and Russia's Gazprom.

CNOOC Taking the Lead in South China Sea

CNOOC plans to push ahead in the South China Sea.

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