Vietnam at Odds With Cnooc’s Gas ExplorationBy Bloomberg News on March 16, 2012
http://www.businessweek.com/news/2012-03-16/vietnam-says-cnooc-s-south-china-sea-bids-violate-territory
Cnooc Ltd. (883)’s moves to develop oil-and gas-rich northern areas of the South China Sea violatesVietnam’s sovereignty, the Vietnamese Foreign Ministry said. China’s biggest offshore oil explorer opened bids toforeign companies last year for 19 blocks near the disputedParacel Islands, according to its website. Vietnam singled outBlock 65/24, which it said sits one nautical mile from one ofthe Paracels, in denouncing a range of Chinese actions thatviolate its territory.
Foreign Ministry spokesman Luong Thanh Nghi asked China to“cease all activities that violate Vietnam’s sovereignty,”according to a statement posted on the ministry’s websiteyesterday. China dismissed the allegations and called on Vietnamto respect its territorial integrity, Foreign Ministry spokesmanLiu Weimin said at a briefing in Beijing today.
China’s neighbors have rejected its map of the South ChinaSea as a basis for joint oil and gas development, leading toclashes in one of the world’s busiest sea corridors. Exxon MobilCorp. (XOM), Talisman Energy Inc. and Forum Energy Plc are amongcompanies that have signed deals to explore disputed parts ofthe sea.
‘May Get Aggressive’ “Vietnam and China may get aggressive about these claimsas they have been in the past,” said Tony Regan, a consultantwith Singapore-based Tri-Zen International Ltd. who waspreviously an executive with Royal Dutch Shell Plc in theliquefied-natural-gas business. “I don’t think many significantplayers would want to take that risk unless it’s very clear thatthe two governments were talking and there’s a reasonableexpectation of the dispute being resolved.”
Block 65/24 is the southernmost offshore area put out forbid by China last year in an offering that includes sectionssouth of Hong Kong. Water levels in the block, covering an areaabout twice as big as the U.S. state of Delaware, are as deep as2 kilometers (1.2 miles), according to CNOOC’s website.
“It is uncertain whether acreage like Block 65/24 andBlock 55/03 are located beyond the Vietnam territorial claimline,” IHS Global Insight said in a report last year. “If socontractors risk becoming embroiled in political tension betweenthe two countries, which are both emerging as attractiveupstream investment locations.”
China ousted Vietnam from the 30 islets and reefs thatcomprise the Paracels in a 1974 battle in which 71 soldiers werekilled. The countries also dispute the Spratly Islands furtherto the south, an area near where fellow claimant the Philippineshas opened tenders on offshore exploration blocks.
Oil reserves in the South China Sea may total as much as213 billion barrels, according to Chinese studies cited in 2008by the U.S. Energy Information Agency.
Vietnam also protested China’s live-fire drill this monthnear the Paracels and plans to expand tourism in the area,according to the ministry’s statement.
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