TAIPEI (TheStreet) -- Looking for oil in the South China Sea is an adventure, but in a fun way U.S. Navy recruiters used to tell us in high school. To probe the nearby East China Sea at the moment might just get your rig shot.China and Japan thirst after an estimated 60 million to 100 million barrels of oil under the 482,000-square-mile sea east of Shanghai. Add to that 1 trillion to 2 trillion cubic feet of natural gas reserves. Their economies, Asia's two largest, need fuel for manufacturing of just about everything in the world. Both are net importers today. But since mid-September, Chinese boats have relentlessly challenged the Japanese coast guard's control of eight tiny East China Sea islets that both sides claim. They're called the Senkau islands by Japan and the Diaoyu islands by China. Japan's deal in September to buy the islands from a private owner motivated China's recent rage. Political analysts say a one-sided move to drill for oil or gas in the surrounding sea comes with so much risk that nothing's going on. China and Japan have discovered plenty of other sources for economic development oil in the meantime. Even the South China Sea, claimed by six governments, has stabilized since summer, letting oil exploration gingerly move forward. To score from deposits under the East China Sea, your best investments are Hong Kong-listed shares or ADRs of China's ever-aggressive, fearless and well-managed CNOOC Ltd. (0883.HK and CEO), which might just go for it anyway. Hold shares of anyone else reliant on the ocean's bounty. "While resources are at stake, no one can realistically expect to safely drill for oil or gas if there is a full-on territorial dispute that could get militarized, since oil and gas rigs are inherently indefensible," says Scott Harold, associate political scientist with the American think tank Rand Corp. A bold move by China or Japan to drill would inflame a diplomatic row that both sides hope to tame so they can get on with mutually productive
On the Japanese side, Nippon Oil Corp. (5001.T) and Teikoku Oil, part of INPEX Holdings (1605.T), once had sights on developing Shirakaba, according to news reports from 2008, before Tokyo accused Beijing of breaking the resource-sharing accord. Teikoku Oil had also received a historic go-ahead from the Japanese government in 2005 to explore 400 square kilometers of the contested waters. But Japan's major oil firms are busier now in other parts of the world, and the East China Sea has produced just 2% to 3% of the world's offshore oil. At the time of publication the author had no position in any of the stocks mentioned. Follow @ChinaWatchRalph This article was written by an independent contributor, separate from TheStreet's regular news coverage.