According to the US Energy Information Agency, the South China Sea has proven oil reserves of around 7 billion barrels while the US Geological Survey has estimated there may be another 20 billion barrels to be discovered. For its part, China optimistically claims the undiscovered reserves could top 200 billion barrels. This latter amount would be enough to provide China with one to two million barrels of oil a day, or as much as 25% of its current daily consumption of close to 8 million barrels.
Much of the undiscovered reserves are believed to be beneath the disputed Paracel and Spratly island chains. The Paracels are roughly equidistant from China, Vietnam and the Philippines; and both China and Vietnam as well as Taiwan lay claim to the islands. However, to Hanoi's outrage, it is China that actually commands the Paracel turf.
This has led to dispute over oil rights in the South China Sea. China has fired a stern warning shot across the bow of ExxonMobil Corporation. China is miffed that Exxon is seeking to enter into a deal with PetroVietnam to explore for oil in waters surrounding the disputed Spratly and Paracel island chains.
China has warned Exxon to pull out of the exploration deal, describing the project as a breach of Chinese sovereignty, according to the South China Morning Post at the weekend, citing unnamed sources close to the US company.
Chinese diplomats in Washington had made verbal protests to ExxonMobil executives in recent months, and warned them the company's future business interests on the mainland could be at risk, the report said. The protests involved a preliminary cooperation agreement, it said, without indicating when it was signed.
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