Chinese Gas Giant Finds New Oilfield in South China Sea

A Chinese oil and natural gas giant has made a major discovery in the energy-rich waters of the South China Sea.

The 100-million-ton oil field is located in the Pearl River Basin near China's Guangdong Province, state-owned China National Offshore Oil Corporation (CNOOC) said in a press release on Friday.

The find is a boon to China, the world's largest net importer and second largest consumer of oil, as the country seeks to boost energy independence and assert its presence in a region known for its strategic and economic importance.

The oil found within the Kaiping South oilfield is light crude, a highly sought-after type of petroleum that yields a higher percentage of gasoline and diesel when refined. The new well there is estimated to yield an impressive daily output of 7,680 barrels of light crude oil and 520,000 cubic feet of natural gas.

"Kaiping South Oilfield is China's first deep-water and deep-play oilfield with proved in-place volume over 100 million tons. The discovery fully demonstrates the broad prospects for exploration in deep-water South China Sea and further expands the resource base for the company's high-quality development," CNOOC Deputy Chief Exploration Officer Xu Changgui said.

CNOOC CEO Zhou Xinhuai emphasized the company's dedication to exploring and developing the South China Sea's resources, with the aim of "continuously enhancing CNOOC energy supply capacity."

CNOOC's public relations office told Newsweek that as of the end of 2022, the company had the equivalent of 6.24 barrels in net proven oil reserves.

China's rapid growth in recent decades depended heavily on oil imports, which comprised an estimated 65 percent of its supply in 2016 and could exceed 80 percent by 2030.

The U.S. Energy Information Agency estimated that as of 2016, the South China Sea contained as much as 11 billion barrels of oil and 190 trillion cubic feet of natural gas. The sea is also a crucial corridor for global trade, with at least one-fifth of it passing through this strategic waterway.

The discovery comes against a backdrop of ongoing territorial disputes and recent escalations in the region.

China asserts sovereignty over the majority of the South China Sea. These territorial claims overlap with those of several neighbors, raising tensions in recent decades as China expanded its military footprint, conducted oil exploration, and developed artificial islands in contested waters.

One notable flare up came in 2014, when CNOOC moved an oil rig into Vietnam's exclusive economic zone (EEZ), sparking a prolonged standoff between the maritime forces of the two nations. International law grants coastal states exclusive access to natural resources within their 200-nautical mile EEZs.

More recently, China's unpredictable clashes with U.S. defense treaty ally the Philippines have reached a fever pitch and raised the specter of miscalculation triggering American military involvement.

On Tuesday, the Chinese coast guard's harassment of a Philippine supply convoy to a remote military installation within its EEZ led to collisions, with one Chinese ship's water cannon damaging a supply boat and allegedly injuring several of its crew.

Each side blamed the other for unprofessional conduct, with China blasting the Philippines for intruding into its waters to deliver construction to the rusting warship-turned-outpost.

Amid these tensions, Chinese leader Xi Jinping on Thursday called for a coordinated approach to maritime issues during an address to representatives from China's armed forces and People's Armed Police Force.

"It is necessary to coordinate preparations for military struggles at sea, the protection of maritime rights and interests, and the development of the maritime economy, and enhance the maritime capabilities," he said.

Update 3/12/24, 1:30 p.m. ET: This article has been updated with a comment from CNOOC.