THE EAST ASIAN CONTINENTAL SHELF: RESOURCES, CLAIMS, AND PROBLEMS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R000600040014-3
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 22
• Document Creation Date: December 16, 2016
• Document Release Date: September 15, 2004
• Sequence Number: 14
• Publication Date: March 1, 1974
• Content Type: REPORT

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Confidential
The East Asian Continental Shelf:
Resource, Claims, and Problems
Confidential
BGI RP 74-14
March 1974
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Summary
Great Expectations
Physical Characteristics
of the East Asian Continental Shelf .
2
Petroleum Prospects
6
Who Owns the Shelf?
8
Legal
9
Physical .
ZZ
Political
Z2
Other Shelf Resources .
Z4
Paragraphs Z and 2, Article 6:
Convention on the Continental Shelf
MAP S
A:
Bathyme try in the China Seas following text
B:
Petroleum Concession Areas in the China Seas
3
C:
Geomorphology of the China Seas
5
D:
Known and Potential Resources
in the China Seas
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SUMMARY
Since 1968, when a geophysical survey of the Yellow and
East China Seas revealed that the underlying seabed may contain
petroleum, the East Asian Continental Shelf has become the
scene of one of the great oil hunts on earth. Thirteen oil
companies are either exploring or drilling, or negotiating for
the right to do so, in 15 hastily granted, often overlapping
exploration concessions that stretch in an unbroken chain from
the Yellow Sea to the southern tip of Taiwan in the Formosa
Strait.
There are some indications that the shelf contains
petroleum reserves on the order of those of the Persian Gulf;
indeed, the Chinese have brought in a well in Po Hai , the
North Vietnamese have reportedly struck of T off Haiphong on
the southern margin of the shelf, and Gulf Oil has a producing
exploratory well just northwest of Taiwan in the East China
Sea. But before the still unknown petroleum wealth of the
shelf can be fully developed, one major question must be
resolved: How much of the shelf can each of the five nations
that share it legally claim?
China, Japan, North Korea, South Korea, and Taiwan --
using one or more of a variety of international laws, all open
to a variety of interpretations -- have laid claim to general
or specific portions of the shelf. The resulting gross over-
lapping of claims led to warnings, threats, and mutual animosity.
As exploration continues, however, and preliminary discoveries
begin to support the more optimistic predictions of the shelf's
potential -- and as oil-poor Japan, South Korea, and Taiwan
increasingly realize the desirability of cooperative action --
the knotty legal, physical , and political problems that at
first threatened development of the shelf seem to be disappearing.
Japan and South Korea recently signed an agreement to develop
jointly the areas of the shelf they mutually claim, Japan and
Taiwan are said to have reached a similar agreement, and China
and North Korea have agreed to cooperate in the exploration
of the northern Yellow Sea Shelf.
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CONFIDENTIAL
Central Intelligence Agency
Directorate of Intelligence
March 1974
THE EAST ASIAN CONTINENTAL SHELF:
RESOURCES, CLAIMS, AND PROSPECTS
Great Expectations
1. The world's seabeds are the setting for one of the
last major oil hunts on earth. Today more than 130 oil
companies are searching for petroleum off the coasts of
80 countries. Offshore production, which now accounts for
18 percent of the world's production of crude oil, may reach
35 percent by 1980. Developing nations and oil-poor nations,
with visions of another Persian Gulf on their doorsteps, are
scrambling to grant petroleum exploration concessions on
their adjacent continental margins. Claims staked out on
the seabeds are sometimes larger than the territory of the
granting nation and often overlap with those of neighboring
states. Seas, once free and open to all , are being marked
off and jealously guarded, and vague sea boundaries are
being referred to and disputed.
2. The East Asian Continental Shelf came into the
spotlight after a 1968 UN-sponsored geophysical survey of
the Yellow Sea and East China Sea strengthened earlier
suspicions that vast quantities of petroleum might be found
there.* The possibility was of immense interest to the
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* The East Asian Continental Shelf, as used in this paper,
refers to the shelf that underlies Po Hai, the Yellow Sea,
the Korea Strait, the East China Sea, that portion of the
South China Sea adjacent to the PRC,, and the Gulf of Tonkin
(Map A, following text).
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five East Asian nations since only one, the Peoples Republic
of China (PRC), is self-sufficient in petroleum. The others
have almost no domestic sources of petroleum: Japan's
production is less than 1 percent of demand, Taiwan's out-
put is equally insignificant, and North and South Korea
produce none at all . And in all of East Asia demand for
petroleum is increasing rapidly. Consequently, Japan,
Taiwan, and South Korea made unilateral claims on the
adjacent seabed, marking off a series of exploration
concessions that stretched in an unbroken chain from the
North Korea - South Korea border in the Yellow Sea to the
southern tip of Taiwan (Map B). Shortly thereafter,
survey operations began in at lr!ast 10 of these 15 hastily
drawn and sometimes overlapping concessions.
3. The potential benefits of close-by sources of
petroleum tend to obscure the many real problems and com-
plexities that are likely to arise among East Asian nations
in the wake of a major strike. Physical problems related
to the shelf, legal technicalities of jurisdiction, and
the longer range implications suggest several questions:
... Do the physical characteristics of the East
Asian Shelf justify the more optimistic predictions?
... What legal and economic problems and complexities
are involved in division of the shelf?
... What are the long range political and economic
implications of a major oil strike?
Physical Characteristics of the East Asian Continental Shelf
4. The East Asian Shelf is one of the widest and most
extensive in the world.* Stretching 1,700 miles From Po
The geologic continental shelf is the subsea continuation
of a continent extending from the low water line to the
depth where there is a marked increase of slope. This
increase has been observed to occur at depths ranging from
20 to 550 meters, with the average at Z35 meters. International
law, by contrast, defines "continental shelf" as that portion
of the geologic shelf beyond a state's territorial sea and
extending to a depth of 200 meters or to any depth where
exploitation of the shelf's seabed resources is possible --
a boundary that technology is steadily pushing seaward.
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Names and boundary representattoo
are not jlecessarlly authoritative.
Area of ROC's claim
(Seabed reserve area)
'Concession areas claimed by two or morn
countries are shown by alternate bands.
0 100 200 Nautical miles
p 100 200 Statute miles
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joint Development Zone
(est. Feb. 1974)
Petroleum Concession Areas
in the China Seas
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CONFIDENTIAL
Hai to the Gulf of Tonkin, the shelf covers an area of
377,000 square miles, equal to 10 percent of China's land
area and to about two and one-half times the area of Japan.*
The shelf's edge occurs at a depth of approximately 120
meters at distances ranging from 70 to more than 500 miles
from the mainland.
5. The shelf long was thought to be mainly a barren
granitic plate devoid of anything of value. The 1968 UN survey,
however, revealed that the shelf actually consisted of a
series of alternating ridges and sedimentary basins. Some
of the ridges appear above sea level as the Shan-tung Pan-tao
(Peninsula) and Liao-tung Pan-tao, the coastal hills and
nearb, islands of southeastern China, the hills and coastal
islands of South Korea, the mountains of Taiwan and Japan,
and perhaps the Ryukyu Island chain. The intervening basins
are grouped into three larger basins -- the Taiwan Basin, the
Yellow Sea Basin, and the Po Hai Basin (Map C). All contain
ample accumulations of sediments -- deposited primarily by
the Huang (Yellow) and Yangtze Rivers and lesser rivers of
South China -- believed to be of the type necessary for the
formation of petroleum.
6. In addition to marine sediments of sufficient age,
thickness, and chemical composition, the action of a
little-understood petroleum forming process and a geologic
structure to ,verve as a reservoir are requi red for the
accumulation of recoverable petroleum. The Taiwan and
Yellow Sea Basins contain Tertiary** sediments high in
organic content and more than 3,000 meters thick, mostly
folded into minor ridges and overlain by porous sandstone --
an association of geologic features ideal for the 4'ormation
and collection of petroleum. Although the stratigraphy of
the Po Hai and South China Sea Basins is less well known,
recent oil discoveries in each are suggestive of the
potential in each basin..
* A ZZ distances are stated in nautical miles.
** An age some 70 to Z00 million years ago when much
of the earth's petroleum bearing rock was deposited.
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Map C
Ridge
JJJ? Trough, basin, or trench
;r
300 Nautical miles
PHILIJ PINES 300 Stotuto miles
NAM[! AND ?OUNDARY RIPR696NTATION \CU`? 130
0 AME NOT N?C[??ARILY AUTHORITATIVE 120'~`~m ,
----
Geomorphology
r
f
h
Chin
S
o
t
e
a
eas
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CONFIDENTIAL
Petroleum Prospects
7. Although East Asian nations wishfully view the
shelf as a "Persian Gulf East," and some opinions can be
marshalled to support this view, evaluations of the
petroleum potential of the shelf are mixed. In part,
this results from the normal uncertainties of prediction
based on conditions that are promising but not yet proven
by the drill. Also, there is reluctance on the part of
both private companies and nations to be candid about a
situation in which the stakes are so high.
8. The more optimistic assessments see the area as
"fantastic," one of the ten largest deposits in the world.
At the other end of the spectrum are those who state that
the chances are 1 in 30 of finding commercial quantities
of petroleum. One company rejected an offer to bid for a
concession, and another relinquished its concession after
preliminary surveys. A middle assessment t(though h not
en-
en-
necessarily more accurate) suggests
couraging enough to merit exploration.
9. Overall, the prospects for 1-i ndi ng petroleum
(oil and/or gas) appear better than even. Oil and gas
have been produced from landward extensions of the three
large shelf basins -- natural gas from western Taiwan
and oil from Sheng-li and Ta-ku, on the mainland (Map D).
The relationship between the oil shale deposits at Mac-
ming in southern China and the geology of the South
China Sea Basin is not completely understood, but the
presence of oil shale along the margins of the basin
offers some encouragement for the petroleum prospects
of the basin. Although not a direct landward extension
of a shelf structure, the basin on which China's rich
Ta?-ch'ing field in Heilungkiang Province is located is
one of a group of basins in North China geologically
related to thnqp that underlio the Ta-ku and Sheng-li
oil fields.
10. Three oil strikes have been reported on the shelf.
The Chinese have brought in a well in Po Hai just offshore
from Ta-ku, the North Vietnamese reported a strike just
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NAMES AND BOUNDARY REPRESENTATION
ARM NOT NECEBBARILY AUTHORITATIVE
in the China Seas
A Drilling activity
Petroleum field
Ag-nlver Fe-Iron S-salt
Au:gold M-monazite Sn - tin
C -coal NO-naluralges TI-titanium
Cr.chromile Zr-Zircon
0 300 Nautical milos
0 300 Siululo miles
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CONFIDENTIAL
off Haiphong, and the GLOMAR IV drill rig, working in Gulf
Oil's concession, has hit oil 100 miles west of the Senkaku
Isl ands .* But elsewhere on the shelf drilling has been less
successful. Royal Dutch Shell drilled to nearly 4,250 meters
(14,000 feet) northeast of Pusan without finding oil, and
Gulf and Texaco-Chevron have drilled at least four dry holes
in their South Korean concessions (Map D).
11 . Bad weather, which has forced abandonment of at
least one Yellow Sea drill site, has also hampered activities
in the AMOCO, CONOCO, and Gulf concessions in the Formosa
Strait and East China Sea off Taiwan. Winds of 40 to 50
knots and 6- to 8-meter (20- to 25-foot) seas, sometimes
reaching 12 meters (40 feet), both unusual for this time
of year, were continual during the late autumn of 1973.
difficulties and uncer ai nties , 13 01 ! c.Jmpd~ es feel the
shelf's prospects are worth a gamble and are in some stage
of drilling, geophysical prospecting, or concession nego-
tiation.
Who Owns the Shelf?
12. Problems of ownership will intensify if a major
petroleum field is discovered on the East Asian Shelf. A
case can be made for each nation's claim to portions of the
shelf. The sticky question is: How large a portion?
Japan, South Korea, and Taiwan have delimited precise
exploration concession blocks; in contrast, the PRC and
North Korea have made broad statements of ownership.
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Unfortunately, international ldw governing the drawing of
such sea boundaries is vague and open to interpretation.
In the case of the East Asian Shelf, no common principle
of law was used. Of the 15 concessions drawn, 13 of which
represent official sovereignty claims,* 11 overlap those of
another nation and areas that may be claimed by the PRC.
Shelf jurisdiction involves knotty legal, physical, and
political questions that either singly or in combination
could obstruct exploitation and development of petroleum
deposits.
Legal
13. The basic legal principles used to determine
continental shelf sovereignty are set forth in the 1958
Geneva Convention on the Continental Shelf. Article 2
permits coastal states to exercise sovereign rights on the
adjacent continental shelf for the purpose of exploring
and exploiting its natural resources. Article 6 contains
the guidelines for dividing up the shelf among the bordering
states. (See Appendix)* South Korea and Taiwan used still
another principle in drawing their shelf boundaries. Termed
the "natural prolongation of land territory" ;;oncept, it was
added to the jargon of international law by the International
Court of Justice with its decision on the division of the
North Sea Continental Shelf in 1969. This concept presumes
that the undersea extension of a state's land territory can
be easily distinguished on the sea floor from that of an
adjacent or opposite state. Apparently, there were no marine
geologists sitting on the court at the time of the decision.
14. Prior to the 1968 UN survey, none of the states
bordering the East Asian Shelf had announced any official
claim to it; indeed, none had even ratified the 1958
Seoul's and Taipei's concessions represent official
territorial claims since they were delimited by appropriate
government agencies and then offered to the oil companies.
Japanese law., on the other hand, calls for the oil com-
pany to delimit the concession block, which becomes an
official Japanese claim only when the Japanese Government
approves it. The Japanese Government has yet to approve
Blocks J-I and J-II in the East China Sea.
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Convention. Although each had declared the limits of its
own territorial sea -- Japan, South Korea, and 'Taiwan:
3 miles; China and North Korea: 12 miles -- none had shown
much interest in the shelf beyond, lacking the technical
capability to explore it and apparently believing it to
be of little value.
15. Since tie UN st,rvey the shelf states have taken
the following actions:
... North Korea has made no official claim. Consid-
erable rhetoric, however, has been directed
towards South Korea and its "treachery ... in
selling the nation's resources to U.S. and
Japanese aggressors." North Korea also has
protested that South Korea has no right to "strike
a bargain with anybody about our continental shelf."
... The South Korean Government granted concessions
in the Yellow Sea ar.a Korea Strait based on the
median line principle and in the East China Sea
based on a liberal interpretation of the "natural
prolongation" principle. This latter action
resulted in gross overlapping of Japan's concessions.
... Japan approved petroleum concessions based on the
median line principle in the East China Sea and
Korea Strait. Its most controversial position
could be the location, if approved, of Concession
Blocks J-I and J-II, in the East China Sea. Their
boundaries derive from Japanese sovereignty over
the Ryukyu Islands and from one interpretation of
the physical character of the Okinawa Trough.
... The Republic of China (Taiwan) ratified the
Continental Shelf Convention in 1970, but with
reservations on Article 6 pertaining to natural
prolongation and islets. Taipei delineated con-
cession blocks in the Formosa Strait, probably
on the basis of a median line, and in the East
China Sea, using "nat"!ral prolongation."
... The Peoples Republic of China laid claim to the
adjacent shelf (1970), but later stated that
jurisdiction of the seas between China and her
neighbors had not yet been determined. Peking's
actions apparently indicate a willingness to
abide by the agreement-between-states clause of
the Geneva Convention.
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Physical
16. A basic question that must be answered before
sorting out the multiple claims in the East China Sea is
the physical character (and hence legal significance) of
the Okinawa Trough, a chasm more than 2,700 meters deep
and as much as 100 miles wide just west of the Ryukyu
Islands (Map A, following text). It is thought by many
to mark the edge of the continental shelf between Kyushu
and Taiwan. At stake is the legality of Japanese Concession
Blocks J-I and J-II, west of the Ryukyus and following generally
the alignment of the Trough. To justify these concessions
the Japanese Government will have to show that the Trough
is merely an irregularity in the shelf, and that the shelf
actually ends immediately east of the Ryukyus. Otherwise,
Japan will he left with only the disputed Senkaku-shoto
(Islands) as a base for any claim to this portion of the
shelf.*
17. Both views can be logically argued. Charts of
the area show the edge of the continental shelf, if they
show i t at al 1 , at the western rim of the Okinawa Trough.
Several detailed studies of the shelf likewise conclude
that the Trough does separate the Ryukyus from the shelf
because the Ryukyus are not geologically a part of the
shelf. A counterargument is that the Ryukyu Trench, just
east of the Ryukyus and almost three times as deep as the
Okinawa Trough, is the true terminator of the shelf.
18. Tokyo might use as legal precedent the decision
of the International Court of Justice that permitted Norway,
for the sake of equity, to extend her jurisdiction beyond
a small, nearshore trough in the North Sea Continental
Shelf. Physically, however, the two cases are dissimilar.
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The N c,, ,vegi an Trough is not nearly as deep or extensive
as the Okinawa Trough, and Norway is part of the European
mainland, not an archipelago more than 300 miles out to
sea. It could also be argued that the Senkakus, together
with the Danjo Islands, located some 450 miles to the north
and likewise perched on the western edge of the Trough,
are points on the base line from which Japan's territorial
sea is measured.* This line of reasoning would, in effect,
define the sea between the Senkaku-Danjo baseline and the
Ryukyus as internal waters and permit Japan to claim
territorial sea west of the baseline and to construct a
median line considerably closer to the mainland than to
the Ryukyus. But in light of precedents already set by
similar boundary litigation, this contention is shaky
and Japan could use it in negotiations only as a bar-
gaining point. Previous boundary agreements have not
allowed the use of small islands a considerable distance
off shore as base points from which to measure the
territorial sea. Such islands, however, can "slightly"
alter the boundaries of a state's territorial sea in favor
of the state that owns them. How slightly, of course,
depends upon the skill of the negotiators. Overall, the
evidence weighs heavily against Japan; her claim in this
area of the East China Sea could well be reduced to the
waters in the immediate vicinity of the Senkakus.
Pol i ti cal
19. The conflicting claims of Taiwan and the Peoples
Republic of China are likely to provoke controversy should
a major oil strike occur in the East China Sea'. Taiwan
has defined five "seabed reserve areas" that extend from
the mainland -- reflecting Taipei's contention that it is
* Article 3 of the 2958 Geneva Convention on the Ter-
ritorial Sea and the Contiguous Zone sites the Zow water
line along the coast as the normal baseline from which to
measure the breadth of the territorial sea. Article 4
allows states that have deeply indented coastlines or
that have fringos of islands in the immediate vicinity
of their coasts to construct an artificial baseline by
islands "appropriate
joining hg the baseZines
and headlands points"
the seaward coasts of between
the indentations.
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the legitimate government, of all of China -- to the
200-meter isobath and north to the approximate latitude
of Shanghai (Map B). The discovery of petroleum in
Concession Blocks J-I and J-II in the East China Sea,
drawn by Japanese petroleum companies, would involve
Japan in a three-way dispute with both Chinese Governments.
Drilling, however, is still contingent on Japanese Govern-
ment approval of applications from these companies.
20. Another area of possible controversy is the
South Korean Yellow Sea concessions. Although the South
Korean-PRC median line appoars to be equitably down
South Korean concessions extend slightly west of it -- a
purposeful act that South Korean officials admit privately,
was done as a bargaining ploy. But what South Korea hopes
to gain is unclear. A joint development agreement with
the PRC seems unlikely since Peking has repeatedly voiced
its opposition to foreigners' exploiting its continental
shelf -- though some indications of a PRC willingness to
jointly develop the Po Hai resources with Japan have been
reported. For South Korea.to haggle for a reduced portion
of the co?cession beyond the median line seems hardly
worth while, For the entire extension is not very great.
But since no oil has been found, and in any event the
oil companies are working safely east of the median line,
a South Korean agreement with the PRC does not now seem
necessary.
21. The northern boundary of South Korea's Yellow
Sea concessions, 37?35' N, overlaps the North Korean 12-mile
territorial sea claim. Recently heightened tensions between
North and South Korea over a number of offshore islands may
presage actions by P'yongyang that could cause Seoul to
consider redrawing the boundary.
22. Several questions of ownership have been resolved
through bilateral negotiations between shelf states. Japan
and South Korea have recently concluded an agreement to
develop jointly the areas of the Korea Strait and the East
China Sea where their concessions overlap, sharing equitably
in the revenue from whatever petroleum might be found.
I n or orea an the PRC ave agree
-to-explore join y the northern Yellow Sea Shelf.
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23. The eq~ii tabl a division of the East Asian Shelf
should be possible since all of the surrounding states have
either demonstrated or expressed a willingness to discuss
the problem. Adequate guidelines, which may be improved
at the Third UN International Conference on the Law of
the Sea, are already available in Paragraphs 1 and 2 of
Article 6 of the 1958 Shelf Convention. All five states
have sent representatives to one or more of the preparatory
sessions for the LOS Conference, scheduled to be held in
Caracas, Venezuela, during the summer of 1974. The rapport
developed among delegates and the prospect of universally
accepted statutes governing the sovereignty and uses
of the sea may encourage the East Asian states to agree
amicably on a division of the shelf.
Other Shelf Resources
24. The only nonliving resources now taken in any
quantity from the shelf and its overlying waters are coal
from mines on northern Taiwan and on Kyushu begun on land
and later extended under the sea, iron from similar mines
on western Kyushu, and salt that is evaporated from sca
water, most extensively along the coast of Po Hai. Other
minerals have not been exploited to any extent, primarily
because the supply from land sources has so far been
sufficient. The shelf potentially contains the same array
of minerals now mined on the adjacent land masses, and it
is possible that deposits of still other minerals exist
near shore. The PRC is believed to be removing titanium,
at least experimentally, from the mud of a small bay on
eastern Hainan Island.
25. The living resources of the East Asian Shelf are
well known. More than 600 species of fish, shellfish, and
seaweed are harvested, and the shelf states cooperate in
varying degrees to ensure that these resources will not
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be depleted. The states also experiment with and practice
various forms of sea farming -- nurturing fish spawning
grounds and cultivating shellfish and seaweed. New
techniques and equipment are producing increasing yields
from the shallow waters of the shelf.
Out'i ook
26. The effect of any significant discovery of oil
or gas in the East Asian Shelf on the economy of the
region, or the world, will be long term. After an oil
strike, 6 to 18 months or longer would be required to,
reach commercial production and an additional 2 to 3
years to fully develop a field.
27. Complex UN-sponsored decisions probably will
have little bearing on delimitation of the shelf in the
Yellow and East China Seas; the states involved will make
their own settlements, which according to Article 6 of
the 1958 Shelf Convention, is the preferred approach.
A mutually accepted, equitable division of the shelf
would be a serendipitous spin-off of the oil hunt. An-
other wou'; be the discovery of an economically exploitable
deposit of another resource -- cobalt, for example, or nickel,
or even uranium. Petroleum, however, will remain -- and
probably increasingly o in the light of current world
events -- the lure that will focus continuing attention
on the Still unknown potential of the East Asian Continental
Shelf.
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APPENDIX
Paragraphs 1 and 2, Article 6, Convention on the
Continental Shelf:
1. Where the same continental shelf is adjacent to
the territories of two or more States whose coasts are
opposite each other, the boundary of the continental shelf
appertaining to such States shall be determined by agreement
between them. In the absence of agreement, and unless
another boundary line is justified by special circumstances,
the boundary is the median line every point of which is
equidistant from the nearest points of the baselines from
which the breadth of the territorial sea of each State is
measured.
2. Where the same continental shelf is adjacent to
the territories of two adjacent States, the boundary of
the continental shelf shall be determined by agreement
between them. In the absence of agreement, and unless
another boundary line is justified by special circumstances,
the boundary shall be determined by application of the
principle of equidistance from the nearest points of the
baselines from which the breadth of the territorial sea
of each State is measured.
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