Taiwan undersea oil plans raise neighbors' eyebrows

The island's exploration efforts in the South China Sea could fuel tensions with China and other nations with territorial claims there. Heated rhetoric last year prompted the US to intervene.

Taiwan, a normally quiet claimant to portions of the disputed South China Sea, plans to explore for undersea oil there, a move likely to test fragile relations with China and upset major Southeast Asian nations.

Ringed by China, Vietnam, the Philippines, Indonesia and others, the waters are believed to hold as many as 213 billion barrels of oil but competing claims from the six bordering nations have fueled tensions, prompting US officials to step in last year to urge calm.

Taiwan’s Bureau of Mines and its top energy company plan to explore this year for some of that oil near an islet that the government holds in the Spratly archipelago, a spokesman for the company said.

Taiwan’s search for oil would remind five competing nations that it still has clout, despite old foe China. The more powerful Beijing forbids its allies around Asia from talking to Taipei and has its own ambitions in the disputed 3.5 million-square-kilometer (1.4 million-square-mile) sea.

“Taiwan seems to be seeking ways to remind other nations of its sovereignty claims,” says Bonnie Glaser, senior Asia adviser with the Washington-based think tank Center for Strategic and International Studies. “Taiwan doesn’t want to be ignored or forgotten.”

China has considered self-ruled Taiwan part of its territory since the Chinese civil war of the 1940s, chilling ties until 2008 when the two sides put aside political differences to discuss trade and economic links.

But new incidents have challenged the fragile détente, and Taiwan is already angry about last year’s Chinese passports that claim two Taiwanese landmarks. Oil could be next, as Taiwan says it has no plans to share its search with China.

Vietnam and the Philippines also staked claims in the sea. Vessels from China and the Philippines were locked in a standoff last year, and 70 Vietnamese sailors died in a clash in 1988.

But even as both countries periodically make what's thought of as aggressive moves in the region, both would stop short of forcing Taiwan out from the waters near Spratly where it already has an airstrip, analysts say. Too much bluster might push Taiwan closer to China, which wants more economic ties with Taiwan and which Southeast Asian claimants see as a bigger threat to their maritime interests.

“Lacking much naval power, Manila would have a hard time actually physically preventing any oil exploration by Taiwan,” says Scott Harold, associate political scientist at the RAND Corp., a policy research nonprofit in the United States.

Hanoi would have a better prospect of reacting militarily, but any stand-off would potentially put them on the wrong side of both Washington and Beijing,” he says.

But much of the oil is already spoken for. China’s state-owned CNOOC Ltd. began drilling undersea last year, and its peer in Hanoi, PetroVietnam, has started surveying. The Philippines is also contracting out other exploration tracts.

Fellow claimant Malaysia currently produces about half the South China Sea’s oil, which is estimated at 1.3 million barrels per day. Brunei also claims parts of the ocean.

Taiwan’s Bureau of Mines will draw up a budget this year and hire CPC Corp. Taiwan to look for oil, CPC spokesman Chen Ming-hui says. Officials told parliament that exploration would cost at least $562,000. 

Taiwan needs the oil as 99 percent of energy sources are now imported, Mr. Chen says. “The South China Sea is a place where Vietnam and others have sighted oil, so we think the opportunities there are good,” he says.

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