China's claims to offshore oil blocks could scare away its own clients, and play into US strategy
A PetroVietnam official points to the locations of offshore oil blocks on a map which lie entirely within Vietnam's 200-mile exclusive economic zone that the China National Offshore Oil Corporation has reportedly opened to foreign bids. Photo: AFP
Russian gas giant Gazprom has said it would continue working with its Vietnamese counterpart in offshore areas that China is looking to open nine oil and gas lots for development to international bidders.
"Gazprom has successfully worked with our Vietnamese partners"¦ since 2009," a JSC Gazprom spokesman told Vietweek on Monday (July 2).
"Until this moment we haven't received any other information or any orders to stop this project," he said.
US oil major Exxon Mobil, which also has been exploring for oil and gas in the area, was more cautious and declined to comment, citing the political sensitiveness of the issue.
"Sovereignty is a matter only governments can address," said Patrick McGinn, an ExxonMobil spokesman.
"We do not provide details of our exploration programs," he added.
China National Offshore Oil Corporation (CNOOC) last week issued a tender inviting foreign companies to jointly develop nine blocks in the western part of the East Sea, also known as South China Sea. Vietnam has dismissed this move as illegal because the blocks lie within its 200-nautical mile exclusive economic zone and continental shelf in accordance with the 1982 United Nations Convention on the Law of the Sea.
"It's absolutely not a disputed area," Vietnamese Foreign Ministry spokesman Luong Thanh Nghi said June 26.
Vietnam National Oil and Gas Group (PetroVietnam) has asked foreign companies to ignore China's offer. It said it would continue working on contracts signed with Gazprom, ExxonMobil, and India's ONGC.
As of press time, ONGC did not respond to written questions submitted by Vietweek.
Carl Thayer, a Canberra-based maritime analyst, said Chinese actions will force Western oil companies to assess the risks of exploring for oil and gas in Vietnamese waters.
But such actions "cannot be taken seriously on a commercial basis," Thayer said, "because the same risk factors will keep major oil companies from taking up [the Chinese] offer."
"˜Political wheel house'
Analysts said China's latest move was probably a response to Vietnam's recent passing of a maritime law which confirmed its sovereignty of the Truong Sa (Spratlys) and Hoang Sa (Paracels) Islands.
In a way, it represents a kind of political tit-for-tat, they said.
They also said the Chinese offer is bad news not only for Vietnam.
"This is definitely not good news for Vietnam, [but also] the Philippines, Malaysia and Brunei -- and the region -- it means China is definitely claiming all within the nine-dash line," said Hawaii-based Mark Valencia, an expert on the dispute.
China and four Association of Southeast Asian Nations (ASEAN) members including Vietnam, the Philippines, Malaysia and Brunei all claim territory in the East Sea. China's claim is the largest, covering most of the sea's 648,000 square miles (1.7 million square km) in what it calls a nine-dash line, a move that has been emphatically rejected by international scholars.
The area is thought to hold vast untapped reserves of oil and natural gas. Estimates for proven and undiscovered oil reserves in the entire sea range from 28 billion to as high as 213 billion barrels of oil, Reuters reported, citing a March 2008 report by the US Energy Information Administration.
"Some [people] behind the scenes within and outside of China have been trying to persuade China not to do something like this," Valencia said, referring to China's claims to offshore oil blocks.
"They painted possible arguments (not necessarily winners) China could use that would be logical and understandable - but it is clear now that they have decided to go their own way.
"They have played right into the US strategic and political "˜wheel house' - the US will use this to show that China wants to change the regional and maybe the world order, change the prevalent interpretation of international law in this case, threaten "˜freedom of navigation' and therefore be a threat to Southeast Asian security and stability."
The US has so far maintained it will play a neutral role in the East Sea dispute. The White House said the leaders "underscored the importance of the principles of ensuring freedom of navigation, respect for international law, and unimpeded lawful commerce."
China has begun "battle-ready" patrols to protect what it called its interests in the East Sea. At a press briefing on Monday, Chinese Foreign Ministry spokesman Liu Weimin also warned Vietnam not to aggravate and complicate the situation in the East Sea.
In another move that analysts said could aggravate tensions over the dispute, the Philippines has said it may ask the US to deploy spy planes over the East Sea to help monitor the disputed waters, Reuters reported Monday.
"We might be requesting overflights on that," Philippine President Benigno Aquito was quoted by the newswire as saying. "We don't have aircraft with those capabilities."
A commentary in Chinese Communist Party mouthpiece, the People's Daily, said Tuesday the Philippines was once more looking to stir up tensions over the issue at a key regional security summit starting this week in Cambodia that China and the US are also attending.
"The US will oppose [Chinese] actions because it threatens ExxonMobil's operations off Vietnam's central coast," Thayer said. "The US is already on record stating that claims to maritime territory must be based on land.
"No doubt China's actions will provoke comment at this year's meeting of the ASEAN [forum]."