The area may be rich in oil and natural gas deposits; however, the estimates are highly varied.

The Ministry of Geological

Resources and Mining of the People's Republic of China estimated that the South China Sea may contain 17.7 billion tons of
crude oil[10] (compared to Kuwait with 13 billion tons). In the years following the announcement by the PRC ministry, the
claims regarding the South China Sea islands intensified. However, other sources claim that the proven reserves of oil in the
South China Sea may only be 7.5 billion barrels, or about 1.1 billion tons.[11] According to the US Energy Information
Administration (EIA)'s profile of the South China Sea region, a US Geological Survey estimate puts the region's discovered
and undiscovered oil reserves at 11 billion barrels, as opposed to a PRC figure of 125 billion barrels.[12] The same EIA report
also points to the wide variety of natural gas resource estimations, ranging from 190 trillion cubic feet to 500 trillion cubic
feet, likely located in the contested Reed Bank".[12]
The South China Sea is dubbed by the PRC as the "second Persian Sea." [13] The state-owned China Offshore Exploration
Corp. planned to spend 200 billion RMB(US$30 billion) in the next 20 years to exploit oil in the region, with the estimated
production of 25 million metric tons of crude oil and natural gas per annum, at a depth of 2000 meters within the next five
years.[14]
The Philippines began exploring the areas west of Palawan for oil in 1970. Exploration in the area began in Reed
Bank/Tablemount.[15] In 1976, gas was discovered following the drilling of a well.[16] However, the PRC's complaints halted the
exploration.
On 27 March 1984, the first Philippine oil company discovered an oil field off Palawan, which is an island province bordering
the South China Sea and the Sulu Sea.[17]These oil fields supply 15% of annual oil consumption in the Philippines.[citation needed]

South-east facing aerial view of PRC-settled Woody Island. The island is also claimed by Taiwan and Vietnam.

The nine-dash line was originally an "eleven-dashed-line," first indicated by the then Kuomintang government of the
Republic of China in 1947, for its claims to the South China Sea. After, the Communist Party of China took over mainland
China and formed the People's Republic of China in 1949. The line was adopted and revised to nine dashes/dots as
endorsed by Zhou Enlai.[18]
The legacy of the nine-dash line is viewed by some PRC government officials, and by the PRC military, as providing
historical support for their claims to the South China Sea. [19]
In the 1970s, however, the Philippines, Malaysia and other countries began referring to the Spratly Islands as included in
their own territory.[citation needed] On 11 June 1978, President Ferdinand Marcos of the Philippines issued Presidential decree No.
1596, declaring the north-western part of the Spratly Islands (referred to therein as the Kalayaan Island Group) as Philippine
territory.[20]
The once abundant fishing opportunities within the region are another motivation for claims. In 2012, the South China Sea
was believed to have accounted for 12% of world fishing catches worth $21.8 billion.[21] There have been many clashes in
the Philippines with foreign fishing vessels (including those of the PRC) in disputed areas. According to some
commentators, the PRC believes that the value in fishing and oil from the sea has risen to a trillion dollars. [22]
The area is also one of the busiest shipping routes in the world. In the 1980s, at least 270 merchant ships used the
route[clarification needed] each day. Currently[timeframe?], more than half the tonnage of the world's crude oil transported by sea passes
through the South China Sea,[citation needed] a figure rising steadily with the growth of the PRC consumption of oil. [citation needed] This
traffic is three times greater than that passing through the Suez Canal and five times more than the Panama Canal.[citation needed]
Fiery Cross Reef being transformed by the PRC in May 2015

Since 1996, Vietnam and the Philippines, and to a lesser degree Malaysia and Brunei, have asserted claims within the area
covered by the Chinese (PRC & ROC) nine-dotted line.[23]
Since 1974, when PRC troops confronted and expelled Vietnamese troops, most of the Paracel Islands have been occupied
by the PRC, and all have been under PRC control.
Similarly, although there have been a small number of notable changes in influence or occupation, the occupation and/or
control of most parts of the Spratly Islands has not changed significantly since the mid 1990s - see List of maritime features
in the Spratly Islands for details. Vietnamese troops control the greatest number of islands, reefs, etc. (approx 29.) Eight
islands are controlled by the Philippines, five by Malaysia, one by Taiwan, and all of those mentioned have various degrees
of "control" over other features. Although the Paracels are completely under PRC control, the PRC has control of only five
"rocks" naturally above water at high tide.[25][24] The significance of this situation has changed dramatically since 2014 whence
the PRC embarked on a program of land reclamation - see Great wall of sand and List of maritime features in the Spratly
Islands for details.
In 2012 the Indian Ambassador to Vietnam, while expressing concern over rising tension in the area, said that 50 per cent of
its trade passes through the area and called for peaceful resolution of the disputes in accordance with international law. [26]
On 17 March 2016, in accordance with Memorandum Circular No. 94 s. 2016, President Aquino created the National Task
Force for the West Philippine Sea, to secure the State's sovereignty and national territory and preserve marine wealth in its
waters and exclusive economic zone, reserving use and enjoyment of the West Philippine Sea exclusively for Filipino
citizens.[27]

2011 agreement[edit]
On 20 July 2011, the PRC, Brunei, Malaysia, the Philippines and Vietnam agreed to a set of preliminary guidelines which
would help resolve the dispute.[which?][28] The agreement was described by the PRC's assistant foreign minister, Liu Zhenmin,
as "an important milestone document for cooperation among China and ASEAN countries".[28] Some of the early drafts
acknowledged aspects such as "marine environmental protection, scientific research, safety of navigation and
communication, search and rescue and combating transnational crime", although the issue of oil and natural gas drilling
remains unresolved.

Chinese objection to Indian naval presence and oil exploration[edit]

On 22 July 2011, the INS Airavat, an Indian amphibious assault vessel on a friendly visit to Vietnam, was reportedly
contacted 45 nautical miles from the Vietnamese coast in the disputed South China Sea by a party identifying itself as the
PLA Navy and stating that the ship was entering PRC waters. [29][30] A spokesperson for the Indian Navyexplained that as no
ship or aircraft was visible, the INS Airavat proceeded on her onward journey as scheduled. The Indian Navy further clarified
that "[t]here was no confrontation involving the INS Airavat. India supports freedom of navigation in international waters,
including in the South China Sea, and the right of passage in accordance with accepted principles of international law.
These principles should be respected by all."[29]
In September 2011, shortly after the PRC and Vietnam signed an agreement seeking to contain a dispute over the South
China Sea, India's state-run explorer, Oil and Natural Gas Corporation (ONGC) said that its overseas investment arm,
ONGC Videsh Limited, had signed a three-year agreement with PetroVietnam for developing long-term co-operation in the
oil sector, and that it had accepted Vietnam's offer of exploration in certain specified blocks in the South China Sea. [31] In
response, PRC Foreign Ministry spokesperson Jiang Yu, without referring to India by name, stated: