Spratly Islands

All of the Spratly Islands are claimed by mainland China, Taiwan, and Vietnam; parts of them are claimed by Malaysia and the Philippines. In 1984, Brunei established an exclusive fishing zone, which encompasses Louisa Reef[?] in the southern Spratly Islands, but has not publicly claimed the island.

The Spratly Islands are not inhabited, though claimant nations have garrisons located on about 45 of the islands.

Chinese geologists have conducted surveys of the waters around the islands, leading to speculation that the area could contain hydrocarbon resources of as much as 70 billion barrels of oil equivalent some 200-1,000 meters below the surface of the sea.

But the claimants to sovereignty have not awarded offshore concessions in the Spratlys for fear of provoking a clash with the other countries also claiming sovereignty ovet the area. Foreign companies have not made any commitments to explore the area until the territorial dispute is settled or the claimants come to terms on joint development.

The dispute over the Spratlys has come to blows between China and Vietnam. China and the former South Vietnam fought a naval battle over the islands in 1974 after the Saigon government allowed western oil companies to explore in the area.

In 1988 the two nations again clashed at sea over possession of Johnson Reef in the Spratlys: Chinese gunboats sank Vietnamese transport ships supporting a landing party of Vietnamese soldiers. The two countries normalized relations in 1991, and Chinese President Jiang Zemin subsequently made two trips to Vietnam. The two nations however still remain at loggerheads over the Spratlys.

In 1992 China and Vietnam granted oil exploration contracts to US oil companies covering areas in the Spratlys which overlapped. In May of that year China National Offshore Oil Corporation ("CNOOC") and Crestone Energy, based in Denver in the United States of America, signed a cooperation contract to jointly explore the 25,155-sq km Wan'an Bei-21 block in the Spratly area of the southwest portion of the South China Sea. CNOOC was to provide seismic and other data covering the contract area, which lies under 300-700 meters of water 1,764 kilometres south-southwest of Hong Kong. Crestone agreed to cover all costs and conduct more seismic surveys and drilling in the area. The contract was extended in 1999 after Crestone failed to complete the exploration. Crestone's Wan'an Bei-21 contract in part covered Vietnam's blocks 133 and 134, where PetroVietnam and ConocoPhillips Vietnam Exploration & Production, a unit of ConocoPhillips, agreed to jointly evaluate prospects in April 1992. This led to a confrontation between China and Vietnam, with each demanding that the other cancel its contract. The two countries have quietened down about the dispute recently, but this should not be interpreted as either having stepped back from their positions.

China recently held talks with ASEAN countries aimed at realizing a proposal for a free trade area with the 10 members. This, Liu said, shows that China is building better economic relations with ASEAN, making it less likely that it would get into a fight over oil and gas exploration in the disputed waters of the Spratlys. China and ASEAN also have been engaged in talks to create a code of conduct aimed at easing tensions in the disputed islands.

From the CIA World Factbook 2000:

• History
• Geography
• Economy
• Transportation

See also: Pratas Islands[?] (東沙群島), Macclesfield Bank[?] (中沙群島), Paracel Islands