Not in FPDA partners' interest for China to acquire Shell's oil and gas business in Sarawak, Sabah

 by Ganesh Sahathevan 

 As previously reported here China's Luconia Shoals adventures may add to Petronas production sharing contractors' costs .  Given China's growing aggression in the South China Sea, it may well be that the Chinese intend to drive up costs and escalate tensions to a point where Shell Plc might be persuaded to sell its interests in the area (see map above) to a Chinese government concern.  Such an acquisition will give China access to a vast network of pipelines, platforms, and other infrastructure which can then be used to further its surveillance and control of the South China Sea.

That, if it occurs, will not be in the interest of any the of Five Power Defence Agreement partners who need free access to the South China Sea in order to secure trade routes which include trade in oil and gas. Australia in particular relies on South East Asian supplies of refined oil and gas to keep the country running. 

Malaysia also will be disadvantaged for China would then have control of both a significant portion of Malaysian government revenue as well as much of its maritime territory.As reported , Malaysia's leaders may well have reason to hand over its oil and gas installations to China, but it does not follow that such a move would be in Malaysia's national interest. 

TO BE READ WITH

Sunday, January 3, 2016

Paying China: Petronas oilfields, installations in the South China Sea could go to China as Malaysia flounders trying to pay its chief financier

by Ganesh Sahathevan


Malaysia's growing reliance on the Chinese Government for capital may see China seeking compensation in the form of Malaysia's oil and gas fields and related infrastructure in the South Chin Sea.While ExxonMobil ,Shell and a host of other smaller foreign companies operate those fields pursuant to production sharing contracts , Petronas remains the ultimate  owner of the fields,and the infrastructure.

The resumption of Petronas infrastructure in the South China Sea can

provide China an alternative to its recent island building campaign that has attracted international criticism, in addition of course to whatever oil and gas there may be left in the relevant areas.
As illustrated in these maps, China could dominate the South China Sea very quickly by simply assuming control of a few strategically located fields.