Malaysian energy needs clash with China claims in South China Sea

Kuala Lumpur, Malaysia – When Malaysian Prime Minister Anwar Ibrahim made his first official visit to China earlier this month, Chinese officials questioned Malaysia’s oil and gas exploration within its exclusive economic zone (EEZ) in the South China Sea.

China was concerned that the state energy company Petronas was “carrying out major activity in an area also claimed by China,” Anwar said in response to a parliamentary question on April 4.

Anwar said he had told his Chinese colleagues that Malaysia considers the area to be Malaysian territory and “therefore Petronas will continue its exploration activities there”.

The exchange highlights Beijing’s increasing efforts to pressure Kuala Lumpur not to exploit the energy resources under its control, even as Anwar seeks to deepen Sino-Malaysian ties.

Beijing claims sovereignty over more than 90 percent of the South China Sea through its “nine dash line,” which cuts through the EEZs of Vietnam, the Philippines, Malaysia, Brunei and Indonesia.

In 2016, an international arbitration panel in The Hague ruled that there was no legal basis for Beijing’s claims over the strategic waterway. Under the United Nations Convention on the Law of the Sea, countries have special rights to exploit natural resources within their EEZ, which extends over 200 nautical miles (370 km) of coastline.

“Given that it is Anwar’s first visit to Beijing in his newfound capacity as Prime Minister, I think China would have found it expedient to try to convince Malaysia to halt energy work in the affected areas, especially Sarawak,” he said. says Collin Koh, a research associate. at the Singapore-based Institute for Defense and Strategic Studies, Al Jazeera told.

Koh said Beijing is aware of Malaysia’s deep economic ties with China and the economic clout it can use to push Kuala Lumpur on the issue.

China has been Malaysia’s largest trading partner for 14 years in a row, with bilateral trade worth $203.6 billion by 2022.

Although Anwar did not name the disputed exploration site, it was widely believed that he was referring to the Kasawari gas field located about 200 km (124 mi) off the coast of Sarawak state in Malaysian Borneo.

Chinese ships and aircraft have repeatedly invaded the waters and airspace near the gas field in recent years, sparking protests from Kuala Lumpur.

In 2021, then-Malaysian Foreign Minister Saifuddin Abdullah said he expected more Chinese ships to enter the area “as long as” Petronas developed the site, which was discovered in 2011 and contains an estimated 3 trillion cubic feet of recoverable gas resources.

“Kasawari is certainly under as much pressure as any other drilling site in the South China Sea [from Chinese ships]Greg Polling, director of the Asia Maritime Transparency Initiative in Washington, D.C., told Al Jazeera.

“We historically have the CCG [Chinese Coast Guard] focus on harassing the offshore supply ships contracted to keep rigs and drillships up and running,” said Polling, explaining that Chinese ships are known to deliberately risk collisions to pressure companies to stop taking contracts for the maintenance of the drilling rigs.

Polling said China’s Coast Guard is interfering with operations in Kasawari, Vietnam’s Nam Con Son gas field and Indonesia’s tuna field because they are the only major projects being developed within the nine-dash line.

Despite its extensive claims in the South China Sea, Beijing has said it wants to work with Malaysia to resolve its differences through dialogue and consultation.

Koh said that despite their differences, Beijing and Kuala Lumpur are holding back on the issue.

“No drastic action has been taken so far except for the actions of their naval forces, while diplomatic communications between these two capitals have largely been kept out of the public spotlight – to prevent the situation from flaring up – via backchannel,” Koh said.

“China is eager to cultivate a friendly Malaysian government under Anwar, and it appears that both countries continue to emphasize the so-called ‘big picture’ of their comprehensive relationship that encompasses more than just the South China Sea dispute. ”

The wealth of the Kasawari field, which Petronas CEO Tengku Muhammad Taufik Tengku Aziz said is large enough to ensure his company remains one of the world’s top five liquefied natural gas exporters, shows how high the deployment in the South China Sea.

According to the Malaysian Investment Development Authority, Malaysia’s oil and gas industry is an important pillar of the economy, accounting for about 20 percent of gross domestic product (GDP).

The estimated 3 trillion cubic feet of recoverable gas reserves from the Kasawari gas field alone make up about 10 percent of Malaysia’s natural gas reserves, said Yeah Kim Leng, an economics professor at Malaysia’s Sunway University who serves on an Anwar advisory committee. .

“The oil field will become operational this year and is therefore a key asset to support the country’s oil and gas export earnings and to meet domestic energy needs both directly and indirectly through imports,” Yeah told Al Jazeera.

The gas field is expected to produce up to 900 million cubic feet of gas daily once it is up and running.

Petronas declined to comment on China’s activities near its South China Sea operations.

However, a spokesman said the development of Kasawari, which includes the world’s largest carbon capture and storage project, will be critical to the company’s efforts to reach net zero carbon emissions by 2050.

“The Kasawari Gas Field project, off the coast of Sarawak, is the beginning of Petronas’ adoption of CCS for high carbon dioxide fields,” the spokesperson said, adding that the project is expected to produce more than 3.3 million tons. will capture carbon dioxide (CO2). ) per year after completion in 2026.