Tuesday, June 17, 2008

More on the East China Sea Gas Fields

The June 1617 Yomiuri reports that two gas fields, Shirakaba/Chungxiao and Asunaro/CanxueLongjing—not four as originally reported by Asahi—will be the subject of joint development in the initial agreement. Other gas fields, presumably including Kashi/Tianwaitian and Kusunoki/Danqiao.

Normally, I wouldn’t have blogged on this issue again until the authorities announced the agreement, but the Yomiuri article includes a map of the four gas fields in question that I want to take note of before I forget. The map gives the Chinese oil equivalent of the natural gas reserve estimates for three of the fields:

Shirakaba/Chungxiao: 63.8 million bbl
Kashi/Tianwaitian : 12.6 million bbl
Kusunoki/Danqiao : 15.2 million bbl
Asunaro/CanxueLongjing : NA

Now look at this:

Shirakaba/Chungxiao: 174.8 thousand bbl/d
Kashi/Tianwaitian : 34.5 thousand bbl/d
Kusunoki/Danqiao : 41.6 thousand bbl/d
Asunaro/CanxueLongjing : NA

That’s how much you can extract every day if you use up the entire reserve in a single year. Take a more reasonable, say 20-year life span for the gas fields, and you get an idea of how trivial the gas fields really are. Even if the Japanese side of the median line ends up doubling the reserves, the numbers still give you a feel for how marginal these fields are. I now have a little sympathy for conspiracy theorists who believe that the Chinese authorities have been pushing their exploitation just to reinforce their claims to the EEZ in the area.

ADD: Remember, it’s the legal framework for the joint development activities including jurisdiction that matters, not the economics of the deal.


Ross said...

So would Japan be willing to lose money on any deal in order to get one that recognizes a legal framework favorable to the median line EEZ proposal?

Jun Okumura said...

Not any deal. But this one should be pretty cheap, unless the Chinese authorities price the gas unreasonably low.

Martin J Frid said...

Link to the Yomiuri article, please? I should compare those figures, they do seem small - even trivial - and maybe that's why a deal is possible.

It just isn't that much to fight about.

And we are running out of oil, fast, as demand is increasing so much, and there are simply no new huge fields discovered anywhere.

Jun Okumura said...

Excuse me, Martin. The June 17 (not 16, sorry) report. I note that the article was more accurate than I had believed, since it says “areas around Asunaro/Longjing”, not Asunaro/Longjing per se. My only excuse is that it was easy to miss the distinction sans hindsight.

This more recent report gives a map that shows the actual area for joint development.

I agree with you that it would have been harder to reach this point had the projected reserves been less trivial. Among other things, development would have started much earlier and possibly under Japanese jurisdiction as well; all that under a different political climate. As for your broader point on oil supply and demand, it certainly looks tight for the long-run. This expands up the market for conservation, as well as alternative energy sources both good and bad for the environment. Unfortunately, “bad” is more cheaply priced.

Jun Okumura said...

ADD: The use of the singular, i.e. “area around Asunaro/Longjing” is more appropriate here.

Sun Bin said...

i think it said 'south side of asunaro/longjing'. but then longjing itself is not a fully explored site, hence it is an extended area.

so the area is really 'around' the fuzzy field.

Jun Okumura said...

Sun Bin:

I was referring to the newspaper article, which I slightly misinterpreted. The idea behind that compromise is that it's separate and distinct from the Asunaro/Longjing field (thus the purported consideration of ROK concerns). I missed that point (I'm not completely sure if the Yomiuri understood the impication of the word 周辺 in that context), and so did the Sankei editorial.

But that's really trivia. What I realy wanted to tell you is that I think that you've done a wonderful job of collating the online information on this issue. I'm going to take a look at the rest of your blog. One point: The Kato post that you link to misses the trend in recent decades toward favoring the median line over the natural extension doctrine in resolving EEZ disputes. (I know that I'm making a gross simplification here. For what I think is a fair and balanced overview of the subject with regard to the East China Sea, there's this Japanese tract by Professor Tadao Kuribayashi.)

Sun Bin said...

Thanks. I think we agree on most of the issues.

I read about recent trends of shift as well. I think this is a valid point that worries the Chinese side (on top of the status of Diaoyu/Senkaku which is pivotal to the whole continental shelf argument).
This is probably the main reason China is willing to talk and reach some short term solution.

Sun Bin said...

btw, i couldn't get the kiribayashi link to work.

is this what you are refering to? (i googled him)
排他的経済水域・大陸棚の境界画定に関する国際法理 : 東シナ海における日中間の対立をめぐって
International Law Issues on the Delimitation of an Exclusive Economic Zone and Continental Shelf : Conflicts on the Maritime Boundary between Japan and China in the East China Sea

Sun Bin said...

the other reason that China is not pushing for going to ICJ (though it believe continental shelf is in favour) is that the same principle is not to its favour when applied to the South China Sea

Jun Okumura said...

Yes, Bin, that's it. Sorry for the inconvenience.

Japan has not been consistent either when you think back to our treaty with South Korea. In our defense, it's been a long time since we cut that deal, and case law has been shifting.