Vietnam Spars With China Over Oil Plans

On June 27, 2012 by stratagem

A spat between China and Vietnam over energy rights in the South China Sea intensified on Wednesday as Vietnam’s biggest company called on China to scrap its plans to develop areas near the Vietnamese shore.

The disagreement, the latest in a string of arguments over the potentially energy-rich sea, erupted earlier in the week when China National Offshore Oil Corp. said it was offering a new batch of oil-exploration blocks inside the 200-nautical-mile exclusive economic zone granted to Vietnam under the United Nations’ Law of the Sea.

Vietnam’s government quickly objected, saying the Chinese state oil firm was moving into its territorial waters. On Wednesday, state-run Vietnam Oil & Gas, or PetroVietnam, weighed in, showing how territorial claims in the sea are increasingly being backed up by powerful companies in addition to rival governments, and potentially adding new sources of tension to the conflict.

PetroVietnam Chairman Do Van Hauon Wednesday described the Chinese firm’s strategy as illegal and urged it to cancel the bidding, adding that two of the blocks offered by China National Offshore Oil, known as Cnooc, overlap with those offered by PetroVietnam.

“We strongly protest Cnooc’s offering to international companies and we request foreign firms not to get involved,” Mr. Hau told reporters.

Cnooc’s spokesman in charge of legal affairs wasn’t available to comment. At an earlier news briefing, China’s Foreign Ministry said Cnooc’s tender represented “normal business activities” in line with Chinese law and international practice.

Cnooc’s move is likely influenced by a desire to see how far it can press its claims in the sea rather than entirely commercial considerations, analysts and diplomats say. Few foreign firms are likely to engage in drilling in such disputed waters, especially after Vietnam’s protests.

“There is no way any foreign company will go there,” said Laban Yu, head of oil and gas research at Jefferies Hong Kong Ltd., a securities and investment banking firm. “This is just Cnooc being used by the central government to make a statement.”

An official from a third country that also has claims in the sea said the bidding announcement appeared to be designed to buttress China’s territorial claims to the area while nearby countries such as Vietnam and Philippines press ahead with their own plans to drill for oil and gas in other parts of the South China Sea.

Read More: WSJ

Related:Philippines and Vietnam agree to hold joint war games in the South China Sea and Pentagon seeks return to long-abandoned military port in Vietnam

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