Kemp: Joint Petroleum Development In The South China Sea

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Shared development of oil, gas and possibly other natural resources is the most promising option for reducing tensions in the South China Sea.

John Kemp is a Reuters market analyst. The views expressed are his own


LONDON, Aug 27 (Reuters) - Shared development of oil, gas and possibly other natural resources is the most promising option for reducing tensions in the South China Sea and should be the focus of efforts to improve diplomatic relations between China and its coastal neighbours.

Joint development agreements (JDAs) are already common across Asia. Most of the countries with a disputed claim in the South China Sea have signed at least one joint agreement to explore for oil and gas, either in the South China Sea or in neighbouring areas like the Gulf of Thailand and the East China Sea, so there are plenty of precedents to draw on.

The basic principle is that countries agree on a legal framework for exploration and production, including sharing fiscal revenues, while shelving their disputes over who actually owns the islands, rocks, shoals and reefs in the area and the seabed mineral rights that come with sovereign ownership.

Joint development agreements would be "without prejudice" to sovereign claims and could allow for the peaceful exploration and development of the area while allowing all the countries involved to maintain their political claims and save face.

The 1982 United Nations Convention on the Law of the Sea (UNCLOS), which all the coastal states have ratified, actively encourages countries to manage disputes by entering into "provisional arrangements of a practical nature" in a "spirit of cooperation and understanding" which are "without prejudice to the final delimitation" of maritime boundaries (Articles 74 and 83).

The aim is to allow economic development to proceed and avoid disputed areas falling into indefinite limbo while improving relations among states.

Getting to Agreement

There are already joint agreements covering some disputed areas in Asia-Pacific between Malaysia and Thailand (1979); Cambodia and Vietnam (1982); Malaysia and Vietnam (1992); Cambodia and Thailand (2001); Malaysia and Brunei (2009); China and Vietnam (2000); Japan and South Korea (1974); Japan and China (2008); Australia and Indonesia (1989); and Australia and East Timor (2002).


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