U.S. Energy Information Administration (EIA) - 0 views
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The East China Sea is a semi-closed sea bordered by the Yellow Sea to the north, the South China Sea and Taiwan to the South, Japan's Ryukyu and Kyushu islands to the East and the Chinese mainland to the West. Evidence pointing to potentially abundant oil and natural gas deposits has made the sea a source of contention between Japan and China, the two largest energy consumers in Asia.
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The sea has a total area of approximately 482,000 square miles, consisting mostly of the continental shelf and the Xihu/Okinawa (Chinese name/Japanese name) trough, a back-arc basin formed about 300 miles southeast of Shanghai between the two countries. The disputed eight Daioyu/Senkaku (Chinese/Japanese name) islands lie to the northeast of Taiwan, with the largest of them two miles long and less than a mile wide. Though barren, the islands are important for strategic and political reasons, as ownership can be used to bolster claims to the surrounding sea and its resources under the United Nations Convention on the Law of the Sea. To date, China and Japan have not resolved their ownership dispute, preventing wide-scale exploration and development of East China Sea hydrocarbons.
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The East China Sea basin, particularly the Xihu/Okinawa Trough, is a potentially rich source of natural gas that could help meet Chinese and Japanese domestic demand.
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China recently became the second largest net oil importer in the world behind the United States and the world's largest global energy consumer. Gas imports have also risen in recent years, and China became a net natural gas importer for the first time in almost two decades in 2007.
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Japan is the third largest net importer of crude oil behind the United States and China, as well as the world's largest importer of liquefied natural gas (LNG), owing to few domestic energy resources.
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Therefore, both China and Japan are interested in extracting hydrocarbon resources from the East China Sea to help meet domestic demand.
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Hydrocarbon reserves in the East China Sea are difficult to determine. The area is underexplored and the territorial disputes surrounding ownership of potentially rich oil and natural gas deposits have precluded further development.
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The EIA estimates that the East China Sea has between 60 and 100 million barrels of oil (mmbbl) in proven and probable reserves.
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China began exploration activities in the Each China Sea in the 1980's, discovering the Pinghu oil and gas field in 1983. Japan co-financed two oil and gas pipelines running from the Pinghu field to Shanghai and the Ningbo onshore terminal on the Chinese mainland through the Asian Development Bank and its own Japanese Bank of International Cooperation (JBIC).
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More recently, both China and Japan have concentrated their oil and gas extraction efforts in the contested Xihu/Okinawa trough.
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Only the Pinghu field, operational since 1998, has produced oil in significant quantities to date. Pinghu's production peaked at around 8,000 to 10,000 barrels per day (bbl/d) of oil and condensate in the late 1990's, and leveled off to around 400 bbl/d in recent years. In the medium-term, the East China Sea is not expected to become a significant supplier of oil.
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EIA estimates that the East China Sea has between 1 and 2 trillion cubic feet (Tcf) in proven and probable natural gas reserves.
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In 2012, an independent evaluation estimated probable reserves of 119 Bcf of natural gas in LS 36-1, a promising gas field north of Taiwan currently being developed as a joint venture between CNOOC and U.K. firm Primeline Petroleum Corp.
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The uncontested Pinghu field began producing in 1998, reaching a peak of approximately 40 to 60 million cubic feet per day (Mmcf/d) in the mid-2000's and declining in recent years.
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China began producing at the contested Tianwaitian/Kashi field in 2006, claiming it as part of its Exclusive Economic Zone.
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The Chinese government prioritizes boosting the share of natural gas as part of total energy consumption to alleviate high pollution from the country's heavy coal use. To that end, Chinese authorities intend to ramp up production and increase East China Sea gas to flow into the Yangtze River delta region, which includes Shanghai and Hangzhou, two large cities with growing gas demand.
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In 2003, Unocal and Royal Dutch Shell announced a joint venture (JV) with CNOOC and Sinopec to explore gas reserves in the Xihu/Okinawa trough. However, Unocal and Shell withdrew from exploration projects in late 2004, citing doubts over the commercial viability of developing energy resources in the disputed area.
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The companies plan to build pipelines and a 42 Mmcf/d onshore processing terminal at Wenzhou to accept the future gas supplies from the LS 36-1 field.
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China and Japan have two separate, but interlinked disputes: where to demarcate the sea boundary between each country and how to assign sovereignty over the Daioyu/Senkaku Islands.
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Despite multiple rounds of high-level negotiations between China and Japan, the two countries have thus far been unable to resolve territorial issues related to the East China Sea.
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Until these disputes are resolved, it is likely that the East China Sea will remain underexplored and its energy resources will not be fully developed.
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The Daioyu/Senkaku Islands consist of five uninhabited islets and three barren rocks. Approximately 120 nautical miles southwest of Okinawa, the islands are situated on a continental shelf with the Xihu/Okinawa trough to the south separating them from the nearby Ryukyu Islands.
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Japan assumed control of Taiwan and the Daioyu/Senkaku islands after the Sino-Japanese War in 1895. Upon Japan's defeat in World War II, Japan returned Taiwan to China, but made no specific mention of the disputed islands in any subsequent document.
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For several decades after 1945, the United States administered the islands as part of the post-war occupation of Okinawa. The islands generated little attention during this time
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Although China had not previously disputed Japanese claims, the PRC claimed the islands in May 1970 after Japan and Taiwan held talks on joint exploration of energy resources in the East China Sea.
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When the United States and Japan signed the Okinawa Reversion Treaty returning the disputed islands to Japanese control as part of the Okinawa islands, both the PRC and Taiwan challenged the treaty.
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China claims the disputed land based on historic use of the islands as navigational aids. In addition, the government links the territory to the 1895 Shimonoseki Peace Treaty that removed Japanese claims to Taiwan and Chinese lands after World War II.
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Japan claims that it incorporated the islands as vacant territory (terra nullius) in 1895 and points to continuous administration of the islands since that time as part of the Nansei Shoto island group.
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According to the Japanese, this makes ownership of the islands a separate issue from Taiwan and the Shimonoseki treaty. Japan cites the lack of Chinese demands on the area prior to 1970 as further validation for its claim.
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Japan defines its boundary as the UNCLOS Exclusive Economic Zone (EEZ) extending westward from its southern Kyushyu island and Ryukyu islands.
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China defines its boundary using the UNCLOS principle of the natural extension of its continental shelf.
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The overlapping claims amount to nearly 81,000 square miles, an area slightly less than the state of Kansas.
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Japan has proposed a median line (a line drawn equidistant between both countries uncontested EEZs) as a means to resolve the issue, but China rejected that proposal.
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Under UNCLOS, Article 121 (3), "Rocks which cannot sustain human habitation or economic life of their own shall have no exclusive economic zone or continental shelf". The Japanese have claimed that the disputed islands generate an EEZ and continental shelf. China has not taken an official position on the status of the Daioyu/Senkakus as rocks or islands.