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Another Saudi Arabia Of Oil Discovered Off Coast Of China?

The South China Sea may hold 213 billion barrels of oil, or 80 percent of Saudi Arabia’s reserves, according to Chinese studies cited in 2008 by the U.S. Energy Information Agency.

The world’s second-largest economy claims “indisputable sovereignty” over most of the sea, including blocks off Vietnam that Exxon Mobil Corp. (XOM) and Russia’s Gazprom OAO (GAZP) are exploring.

Disputes have strained China’s ties with its neighbors and tensions rose this year as Vietnam said oil survey boats were harassed by Chinese vessels. The friction threatens maritime security in one of the world’s busiest shipping lanes and may be discussed at a two-day summit of Asia-Pacific leaders hosted by U.S. President Barack Obama in Honolulu starting tomorrow.

“China is the elephant in the room at the moment, so like it or not, you cannot ignore it,” said Lin Boqiang, director of the independent China Center for Energy Economics Research at Xiamen University in Fujian province. “Countries at the rim of the South China Sea are under pressure to find a practical way to deal with its presence — not to anger or challenge it.”

The sea lies south of mainland China at the western extreme of the Pacific Ocean, and while it borders several nations China claims a huge expanse. That’s based largely on a historical map that predates the founding of the People’s Republic in 1949. There are hundreds of islands, many disputed.

China-Vietnam Clash

Chinese and Vietnamese military forces clashed in the Paracel Islands in 1974 and the Spratly Islands in 1988. The region, marked by China’s “nine-dotted line” to delineate its territorial claims, extends hundreds of miles south from its Hainan Island to equatorial waters off the coast of Borneo, and overlaps with areas claimed by Brunei, Malaysia and Taiwan.

The Philippines will propose a new initiative to settle disputes in the South China Sea at a meeting of the Association of Southeast Asian Nations next week, Foreign Affairs Secretary Albert del Rosario said Oct. 26. President Benigno Aquino will also meet with U.S. Secretary of State Hillary Clinton in Manila this month and discuss maritime security with Obama at the East Asia summit in Bali on Nov. 18, del Rosario said Nov. 9.

The U.S. set off China’s ire in 2010 when Clinton, speaking at a regional summit in Hanoi, called resolving the competing claims to the sea “a leading diplomatic priority.” That drew a rebuke from Chinese Foreign Minister Yang Jiechi, who said internationalizing the incident with U.S. involvement “can only make matters worse and more difficult to solve.”

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