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**reviewhttp://moneymorning.com/2012/12/05/south-china-sea-dispute-could-fuel-global-energy-war/

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SOUTH CHINA SEA DISPUTE COULD FUEL GLOBAL ENERGY WAR The South China Sea dispute, a fight over the 1.4 million-square-mile area crossed by one-third of world shippingroutes, played out at the recently concluded Association of SoutheastAsian Nations (ASEAN) summit in Cambodia amongChina, Taiwan, Vietnam, Malaysia, Brunei and the Philippines.Whats behind the fight is a vast quantity of oil and gas believed tolie beneath the South China Sea. China and the other nationsdesperately want the energy resources beneath the South ChinaSea, and the dispute has caught the attention of global financialmarkets. Chinas biggest offshore oil company, CNOOC Limited(NYSE ADR: CEO), recently updated its projection of energy assetsin the South China Sea. It said the area could hold 17 billion tons ofoil and 498 trillion cubic feet of natural gas.

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All those resources could not be extracted, but enoughcould be taken out to double Chinas current reserves of oil andnatural gas. For its part, Chinas Ministry of Land and Resourcessays the area contains more than 40 billion tons of oil equivalent.Most of that is believed to be in the form of natural gas. AnotherChinese estimate says 2,000 trillion cubic feet of natural gas lieunder the South China Sea. That would be enough gas to meet thecountrys needs for the next 400 years, based on 2011 consumptionlevels! No wonder energy-hungry China is so interested in pushingits claims in the region. Exploration in the South China Sea hasbeen very limited so far because few major international oilcompanies want to get involved in the territorial dispute.

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China has already successfully pressured companies likeBP plc (NYSE: BP) and Exxon Mobil Corp. (NYSE: XOM) toabandon its deals with neighboring Vietnam. CNOOC itself causeda diplomatic row with Vietnam in June when it put up for auctionnine oil and gas blocks that Vietnam says are in its territory. Theblocks had already been auctioned by Vietnam to companiesincluding ExxonMobil and Russias Gazprom.CNOOC Taking the Lead in South China Sea CNOOC plans to push ahead in the South China Sea.