0.Energy: Oil reveals where the next bombs will fall!


Map of South China Sea claims by country


Oil reveals where the next bombs will fall!

When President Obama explained America’s involvement in Libya’s civil war, he didn’t mention oil once. Instead, he used euphemisms like “national interest” and “strategic interest.” Yet it’s hard to imagine that the United States or its European allies would be mounting airstrikes in Libya if the African nation weren’t one of the world’s top 20 oil producers.

The other conditions Obama cited to justify airstrikes are valid: It was obvious that Libyan leader Moammar Qaddafi was massacring civilians and intent on murdering many more. Some form of meaningful opposition was forming. Airstrikes by coalition jets could accomplish something tangible, by holding off or driving back Qaddafi forces. Yet the same conditions exist in other nations, and the West doesn’t intervene there.

Oil is obviously what tipped the balance. No U.S. president has ever admitted it, but oil has clearly been the biggest factor in America’s activist role in the Middle East over the last 20 years. It’s the reason we’ve fought two wars in Iraq, stationed American troops throughout the Persian Gulf region, and formed alliances with authoritarian regimes in Saudi Arabia, Kuwait, Yemen, Bahrain, Qatar, and most other countries in the Middle East. Europe, just as dependent on imported oil as we are, is more or less in lockstep with the United States.

So with Libyan-style unrest still percolating throughout the Middle East and North Africa, it’s worth asking an obvious question:

How much oil does a nation need to tip the balance in favor of intervention?

My unscientific answer:

The tipping point lies somewhere between 500,000 barrels and 1.8 million barrels of daily oil production. And that may help indicate where America and its oil-thirsty allies are likely to get involved next.

Libya’s oil-producing capacity is 1.8 million barrels per day, which was obviously enough to trigger Western intervention. At the lower end, daily production of 500,000 barrels or so seems not to be enough. That’s how much oil Sudan produces, for example, and Western nations have carefully avoided any direct involvement there despite rebellion, famine, and other kinds of turmoil that have killed millions and destabilized parts of neighboring countries. So by this cold logic, it takes more than 500,000 barrels of daily oil production, but less than 1.8 million, to get on the West’s strategic-interest list.

It’s not quite that simple, of course, so here’s some additional handicapping on several important nations that are drawing the West’s attention these days:

Libya: Its 1.8 million barrels of daily oil production accounts for just over 2 percent of the world’s total output, which has been enough to push oil prices up by $5 to $10 per barrel, as Libyan production has generally halted. It’s worth pointing out that little of Libya’s oil ends up in the United States. Most of it goes to Europe, which might help explain why Britain, France, Italy, and other European nations have been so eager to participate in the Libyan no-fly operation. But any oil taken off the market will raise prices everywhere, since oil is a global good and any lost capacity raises the demand for oil produced everywhere else. With Americans concerned about rising gas prices, any situation that pushes oil prices up by $5 or more apparently qualifies as a matter of U.S. strategic interest.

Bahrain: Daily oil production: 49,000 barrels, according to the CIA World Factbook. That’s a tiny amount, way below my informal threshold for intervention, which is why the West has shaken its fist, but little else, as Bahrain’s government has brutally dispatched protesters. Bahrain also hosts the headquarters for the U.S. Navy’s Persian Gulf fleet, but that could be moved someplace else.

Syria: 400,000 barrels of oil per day. Syria’s hard-line regime faces mounting protests that could become a full-blown challenge to its hold on power. But oil alone won’t bring in Western bombers. It would probably take a threat to neighboring Israel or unmistakable signs that Iran is exploiting Syrian unrest for its own purposes.

Yemen: 288,000 barrels of oil per day. Yemen has some similarities to Libya: An aging dictator is facing open revolt, with some of his own military commanders even turning on him. But Yemen has only about one-sixth as much oil as Libya. The presence of terrorist groups linked to al Qaeda raises the stakes, but they’ve already been facing covert attacks by the U.S. military. That makes the case for overt intervention in Yemen weak.

Algeria: 2.1 million barrels of oil per day. Protests have wracked Algeria for years, though they’ve become more potent lately. With more oil capacity than Libya, Algeria could become an important hotspot if unrest intensifies or threatens oil output.

[See 5 reasons to stop fearing China.]

Oman: 816,000 barrels of oil per day. Modest protests seem to have calmed, and with oil production on the low end, Oman isn’t that much of a worry for the West, anyway. More important than oil is its strategic location, on the southern side of the Straits of Hormuz, directly across from Iran.

Egypt: 681,000 barrels of oil per day. Egyptian protestors got rid of Hosni Mubarak on their own, and there was never serious talk of Western involvement. That suggests Egypt’s modest oil production falls below the strategic-interest threshold.

Qatar: 1.2 million barrels of oil per day. Significant energy production and a tiny population make Qatar one of the world’s wealthiest nations, with per-capita GDP of about $145,000—three times the U.S. level. The wealth is spread around widely enough that there’s no unrest to speak of. But if there ever were, Qatar could very well meet the intervention threshold.

Kuwait: 2.5 million barrels of oil per day. Murmurs of protest seem to have been quieted by fatter bribes—er, enhanced subsidies—to Kuwaiti citizens. As in Qatar, nothing’s brewing here. But the 1991 Persian Gulf War, whose primary purpose was to eject Saddam Hussein’s forces from Kuwait, indicates the importance of the tiny, oil-rich kingdom.

Iraq. 2.4 million barrels of oil per day. Iraq is a major oil producer, worth two U.S. wars, $700 billion in spending since 2003, and more than 4,750 American casualties. It’s clearly within the threshold for intervention.

Iran: 4.2 million barrels of oil per day. That’s 75 percent more oil than Iraq, which suggests that Iran ranks high on the strategic-interest index. Plus, Iran sponsors terrorists, seeks the annihilation of Israel, and is close to possessing nuclear weapons.

Saudi Arabia: 9.8 million barrels of oil per day. Russia produces more, but Saudi Arabia is the top Persian Gulf oil importer to the United States, and its stability is vital to world oil markets. Does anybody doubt that the Western world would throw all its resources into battle if that’s what it took to keep Saudi oil flowing?

So by my crude reasoning, Syria, Yemen, Bahrain, Oman, and Egypt are probably safe from Western intervention—for better or worse—unless Osama bin Laden himself shows up and declares he’s in charge. Qatar and Kuwait are blissed out on oil money, with little likelihood of upheaval. Algeria is a wild card that could end up like Libya, if its dictator loses control. Iraq and Saudi Arabia are both governed by regimes friendly to the United States, though it would be vital to keep their oil flowing no matter who’s in charge. And Iran is the most problematic big oil producer, but it’s also the riskiest to tangle with. Wherever the next bombs fly, one safe bet is that the ultimate target will be oil.

US News






Vietnam’s East Sea (South China sea) Territorial Issues

Related: East China Sea 
Competing territorial claims over the South China Sea and its resources are numerous, with claims for various areas by Brunei, Cambodia, China, Indonesia, Malaysia, the Philippines, Taiwan, Thailand, and Vietnam. The UN Convention on the Law of the Sea (UNCLOS) provides for claims to areas of the ocean to be made using a 200 mile Exclusive Economic Zone (EEZ) and/ or the continental shelf principle. 
Claims by Country
Country South China Sea Spratly Islands Paracel Islands Gulfof Thailand
Brunei UNCLOS no formal claim no n/a
Cambodia not applicable (n/a) n/a n/a UNCLOS
China all* all all n/a
Indonesia UNCLOS no no n/a
Malaysia UNCLOS 3 islands no UNCLOS
Philippines significant portions 8 islands no n/a
Taiwan all* all all n/a
Thailand n/a n/a n/a UNCLOS
Vietnam all* all all UNCLOS
*excluding buffer zone along littoral states (calculations for buffer unknown)



Bruneis claim to the South China Sea is limited to its EEZ, which extends to one of the southern reefs of the Spratly Islands. However, Brunei has not made any formal claims to the reef nor to any of the Spratlys. Brunei makes no claims towards any of the Paracel Islands. 


Cambodia claims portions of the Gulf of Thailand based upon its EEZ and the continental shelf principle, as well as its history in the Gulf. In 1982, Cambodia signed The Agreement on Historic Waters with Vietnam, setting the stage for later cooperation between the two countries. In 2006, Cambodia and Vietnam announced their intention to share the oil resources of the Gulf of Thailand. Cambodia has no such agreements with either Thailand or Malaysia. 


China claims almost all of the South China Sea. China claims all of the Spratly Islands (Nansha Islands in Chinese), and occupies several of the islands with its military. In 1974, China seized the Paracel Islands from Vietnam and continues to maintain sovereignty over the islands. Additionally, China claims the Pratas Islands. Chinas claims to the South China Sea are based on the EEZ and continental shelf principle as well as historical records of the Han (110 AD) and Ming (1403-1433 AD) Dynasties. 


Indonesias claim to the South China Sea is limited to the boundaries of the EEZ and continental shelf. Indonesia claims neither the Spratly nor the Paracel Islands. 


Malaysias claim to the South China Sea is limited to the boundaries of the EEZ and continental shelf. Malaysia claims three islands of the Spratlys, having built a hotel on one and bringing soil from the mainland to raise the level of another. Malaysia makes no claim to the Paracel Islands. Malaysia also claims portions of the Gulf of Thailand, based upon its EEZ and the continental shelf principle. Malaysia signed a cooperative agreement for exploration and development with Thailand in 1979. In 1992, Malaysia and Vietnam signed a Joint Development Areas agreement. Malaysia has no such agreement with Cambodia. 


The Philippines claim a sizeable portion of the South China Sea. The Philippines occupy eight of the Spratly Islands (Kalayaan in Filipino). The Philippines do not claim the Paracel Islands. Filipino claims are based upon the EEZ and continental shelf principle, as well as a 1956 Filipino explorers expedition. 


Taiwan claims almost all of the South China Sea. Taiwan claims all of the Spratly Islands (Nansha Islands in Chinese) and has announced its intention to build an airstrip on Taiping. Taiwan claims all of the Paracel Islands. Additionally, Taiwan occupies the Pratas Islands. Taiwans claims are based on principles similar to those of China. 


Thailand claims the Gulf of Thailand based upon its EEZ and the continental shelf principle. Thailand signed a cooperative agreement for exploration and development with Malaysia in 1979. In 1997, Thailand and Vietnam signed an agreement setting the delimitation of their respective sea boundaries. Thailand has no agreements with Cambodia. 


Vietnam claims a significant portion of the South China Sea based upon its EEZ and the continental shelf principle. Vietnam claims all of the Spratly Islands (Truong Sa in Vietnamese), and has occupied twenty of them. Vietnam claims all of the Paracel Islands (Hoang Sa in Vietnamese) despite being forcibly ejected by China in 1974. Vietnam also claims the Gulf of Thailand based upon its EEZ and the continental shelf principle. In 1982, Vietnam signed The Agreement on Historic Waters with Cambodia, setting the stage for later cooperation between the two countries. In 2006, Vietnam and Cambodia announced their intention to share the oil resources of the Gulf of Thailand. In 1992, Vietnam and Malaysia signed a Joint Development Areas agreement. In 1997, Vietnam and Thailand signed an agreement setting the delimitation of their respective sea boundaries. 
Map of South China Sea claims by country


Source:   http://www.eia.doe.gov/cabs/South_China_Sea/SouthChinaSeaTerritorialIssues.html







The focus of most attention regarding the South China Sea’s (SCS) resources has been on hydrocarbons, especially oil. Oil reserve estimates for the entire SCS region vary. One Chinese estimate suggests potential oil resources as high as 213 billion barrels of oil (bbl). A 1993/1994 estimate by the U.S. Geological Survey estimated the sum total of discovered reserves and undiscovered resources in the offshore basins of the SCS at 28 billion bbl. 
The fact that surrounding areas are rich in oil deposits has led to speculation that the Spratly Islands could be an untapped oil-bearing province. There is little evidence outside of Chinese claims to support the view that the region contains substantial oil resources. One of the more moderate Chinese estimates suggested that potential oil resources (not proved reserves) of the Spratly and Paracel Islands could be as high as 105 billion bbl. Due to the lack of exploratory drilling, there are no proven oil reserve estimates for the Spratly or Paracel Islands. 

Natural Gas

Natural gas might be the most abundant hydrocarbon resource in the SCS. Most of the hydrocarbon fields explored in the SCS regions of Brunei, Indonesia, Malaysia, Thailand, Vietnam, and the Philippines contain natural gas, not oil. Estimates by the U.S. Geological Survey and others indicate that about 60 to 70 percent of the region’s hydrocarbon resources are natural gas. 
As with oil, estimates of the SCS natural gas resources vary widely. One Chinese estimate for the entire SCS estimates natural gas reserves to be 2 quadrillion cubic feet. Another Chinese report estimates 225 billion barrels of oil equivalent in the Spratly Islands alone. If 70 percent of these hydrocarbons are gas as some studies suggest, total gas resources (as opposed to proved reserves) would be almost 900 trillion cubic feet (Tcf). In April 2006, Husky Energy working with the Chinese National Offshore Oil Corporation announced a find of proven natural gas reserves of nearly 4 to 6 Tcf near the Spratly Islands. 


Field ownership is an important point to be clarified prior to production in any area of the world (please refer to South China Sea Territorial Issues for an overview, or click here for a map detailing fields and boundary disputes). Despite the contested nature of the SCS, production is being undertaken by the following countries: 


claims the natural gas-rich fields offshore of the Natuna Islands. As of 2008, the fields are estimated to have close to 46 Tcf of recoverable reserves. Indonesias claim was undisputed until China released an official map with unclear maritime boundaries indicating that Chinese-claimed waters in the South China Sea may extend into the waters around the Natuna Islands. Indonesia responded in 1996 by holding large military exercises in the Natuna Islands region. Since then, Indonesia has begun major natural gas production in the Natuna area without China voicing any objection. Indonesia has been exporting Natuna gas to Singapores Jurong island via a 400-mile undersea pipeline since 2001.



The Filipino Malampaya and Camago fields are in waters claimed by China. Both fields are estimated to contain a combined amount of 2.3 to 4.4 Tcf of natural gas reserves. The Philippines has proceeded with development of the fields and linked the gas output to three power plants via a 312-mile pipeline. There have been no objections from China regarding this development. The Malampaya field has an estimated 150 million bbl of oil; as of January 2008, plans were underway to begin international bidding rounds for development of the field.



Many Malaysian natural gas fields located offshore Sarawak are also claimed by China, but to date, China has not specifically objected to their development. Discoveries of oil in 2002 and 2004 (by Murphy Oil and Shell Malaysia, respectively) off the coast of Sabah have contributed to the dispute between Malaysia and Brunei over offshore rights. Brunei had asserted a 200-mile exclusive economic zone (EEZ) off its coastline in 2000. Negotiations between the two governments to resolve the issue are ongoing.



Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s