The search for offshore energy resources has triggered a border dispute between Burma and Bangladesh that threatens to complicate China's ambitious designs to pump fuel from the region to its landlocked southwest Yunnan province through a yet-to-be-built 2,300 kilometer long pipeline.
The two sides squared off this month when Dhaka challenged the legitimacy of offshore exploration by South Korea's Daewoo, which won the now contested concession from Myanmar's military government. Tempers flared at the start of November when Myanmar sent two warships as escorts for Daewoo's vessels and rigs working in the Bay of Bengal in what Burma has designated as offshore block AD-7.
The block lies in waters along Burma's far western border and
about 93 kilometers southwest of Bangladesh's St Martin's island. Dhaka has formally protested to both the Burmese government and Daewoo, and sent three warships into the area, underscoring its demand for an immediate halt to Daewoo's exploration.
Both sides temporarily mobilized their frontier forces, but tensions eased when Daewoo on November 6 shifted its rig out of the contested waters. Burma's state-run newspaper, The New Light of Myanmar, reported that the "necessary survey was completed and the rig moved to the uncontested offshore block A-3 further to the east". Bilateral talks over the dispute held in Dhaka this week were inconclusive, with the sides agreeing only to meet again.
The offshore border has been a contentious issue since the creation of Bangladesh in 1971 after the civil war in Pakistan. The demarcation stakes have risen with the recent discovery by Daewoo of large gas fields in the area. These finds, until now in undisputed Myanmar waters, suggested that areas further to the west and entering the disputed zone might also produce gas.
Daewoo discovered large gas stores in Burma's A-1 block, just offshore its Rakhine state coast near Sittway and east of the contested maritime border zone, in 2003. Daewoo estimated at the time the find contained 4-6 trillion cubic feet of gas at an easy-to-tap depth of 150 meters, and had potential prospects of 14-20 trillion cubic feet.
Daewoo has since 2001 operated the block in partnership with India's Oil and Natural Gas Corporation (ONGC), GAIL India and the Korea Gas Corp. In early 2004, Daewoo also took up block A-3, immediately below block A1, and subsequently the contested block AD-7 to the west, in February 2007.
The Shwe discovery in Block A-1 triggered a frenzy of new exploration in Burma's offshore western areas. China's state-run CNOOC entered in 2004; Essar, the private Indian company, in 2005; GAIL as an independent operator in December 2006; China's Natural Petroleum Corporation (CNPC)/PetroChina in January 2007; Malaysia's Rimbuan Petrogas in February 2007; and ONGC, taking up three blocks, in September 2007.
Similar dynamics are at play in other potentially hydrocarbon-rich areas. Contested claims between Vietnam and China in the South China Sea have come into sharp relief over the past 18 months. Beijing has stridently declared that exploration rights tendered by Hanoi off Vietnam's southeast coast in 2007 to the UK's BP and India's ONGC and in mid-2008 to the US's ExxonMobil have been conducted in Chinese waters.
There are also disputes brewing between Brunei and Malaysia over the maritime border between the east Malaysian state of Sabah and Brunei, and between Malaysia and Indonesia over an offshore area between the southeast corner of Sabah and northeast Kalimantan.
These conflicts came to the fore respectively in 2003 and 2005, after governments awarded exploration rights to international companies in areas where maritime borders were still unsettled, and they are still unresolved. Also at issue is the believed to be highly prospective Overlapping Claims Area between Thailand and Cambodia.
The existence - or at least the possibility - of rich oil and gas stores in contested maritime areas is making it harder for claimant states to reach agreements. Analysts say tensions are being driven and negotiations stalled by growing governmental anxieties over energy security, and none want to be remembered as the one who gave away a potential sovereign prize.
"If it were a matter of fish, that is, if the stakes were just fishing rights, negotiations would be a lot easier," one international lawyer says.
It's a problem not unique to Asia. According to geographers Victor Prescott and Clive Schofield in their definitive Maritime Political Boundaries of the World, less than half of some 427 potential maritime boundaries have been formally agreed. In Southeast Asia, where boundaries were often determined by now departed colonial rulers, conditions are especially prone to dispute.
Few parts of the world have as many states situated in and around such a complex, oil and gas-rich archipelagic geography. There are nine Association of Southeast Asian Nation (ASEAN) states, plus Timor Leste, along with China and Taiwan, that have maritime coasts in the region. The 1982 United Nations Law of the Sea, which allows states to claim exclusive economic zones 200 nautical miles, or about 370 kilometers, from their coastlines has often sparked rather than extinguished disputes.
These have often erupted into verbal slanging matches between governments, centering generally on how potential petroleum spoils would be exploited and divided. Sending out the gunboats, as seen this month with the Bangladesh-Burma dispute, has been a common regional response.
As Alan Perry, a UK-based law partner at Edwards, Angell, Palmer & Dodge and an expert on cross-border disputes, recently told a conference in Singapore, "If you don't protest, you may waive your rights."
With the Bangladesh-Burma dispute, those rights represent potentially huge revenues, considering China's and India's interest in piping fuel claimed by Burma to their respective domestic markets.
So far, Beijing has won out and gas is scheduled as early as next decade to be transported through a proposed 2,300 kilometer pipeline directly to its southwest Yunnan province. China's success in securing the fuel, some say, reflects Beijing's larger economic interests in Burma, as well as its political and diplomatic support for the ruling military junta.
Piping gas to India's West Bengal would for efficient delivery require negotiating transit rights through Bangladesh, which won't happen any time soon in view of Burma's and Bangladesh's recent spat.
Analysts note there were already long-standing difficulties, steeped in a history of mutual suspicion, between Dhaka and New Delhi over the idea of building a pipeline to India. Private companies operating in Bangladesh, including Chevron, Shell and Cairn Energy, as well as multilateral lenders like the World Bank and the Asian Development Bank, have long argued the economic case for pipeline-fed exports.
At the same time, the maritime dispute has only marginally complicated China's energy designs for the area, but could have wider implications if tensions resume and escalate.
When the situation threatened to spin out of control this month, China's Foreign Ministry publicly called for cooler heads to prevail and for both sides to settle the dispute "through equal and friendly negotiations".
Andrew Symon is a Singapore based writer and analyst specializing in energy and resources.