China Unveils Major South China Sea Gas Find

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China Unveils Major South China Sea Gas Find

Large yields may further fuel resource extraction efforts in contentious waters.

China said Saturday that a recent gas discovery in the contentious South China Sea could yield more than 100 billion cubic meters of natural gas, highlighting Beijing’s continued efforts to extract resources from waters in spite of lingering territorial disputes with neighboring countries.

On February 7, Global Times reported that China National Offshore Oil Corp (CNOOC) had disclosed that the Lingshui 17-2 gas field, discovered 150 kilometers south of China’s southernmost island of Hainan, had an annual output of up to four billion cubic meters.

Xie Yuhong, a manager with CNOOC, characterized that estimate as “conservative.”

The Lingshui 17-2 gas field made headlines when it was originally discovered in September last year because it was China’s first deepwater gas field discovery in the South China Sea. The field was discovered by China’s first deepwater drilling rig, CNOOC 981, which was completed in 2011.

The 100 billion cubic meter yield is significant even when placed against Beijing’s massive and still growing natural gas needs. According to a recent report by the China Petroleum and Chemistry Industry Federation, China’s natural gas consumption amounted to 180 billion cubic meters last year, while proven reserves reached around 37 trillion cubic meters.

Roughly a third of China’s consumption was imported, however. China has been trying to decrease its reliance on other countries partly by redoubling efforts to develop oil and gas extraction projects in the South China Sea. Lin Boqiang, an energy expert from Xiamen University, told Global Times that although the State Council had urged the country to speed up such efforts in November last year, the lack of deepwater exploration technology has reportedly been a key obstacle.

Despite the fresh hype over the size of the find, analysts have cautioned that it may take a few years for the necessary infrastructure to be put in place in order for the field to actually contribute to domestic gas production.

While calculating energy reserves in the South China Sea very much remains an inexact science, one estimate claims that about a third of China’s current oil and gas reserves are offshore, and a third of those offshore reserves are in the South China Sea, mostly in deepwater.