Vietnam Renews India Oil Deal In Tense South China Sea

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Hanoi: Vietnam has extended an Indian oil concession in the South China Sea and begun drilling in another area it disputes with China in moves that could heighten tensions over who owns what in the vital maritime region.

The moves come at a delicate time in Beijing’s relations with Vietnam, which claims parts of the sea, and India, which recently sent warships to monitor the Malacca Straits, through which most of China’s energy supplies and trade passes.

Vietnam granted Indian oil firm ONGC Videsh a two-year extension to explore oil block 128 in a letter that arrived earlier this week, the state-run company’s managing director Narendra Verma told Reuters.

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Part of that block is in the U-shaped ‘nine-dash line’ which marks the vast area that China claims in the sea, a route for more than $5 trillion in trade each year in which the Philippines, Brunei, Malaysia and Taiwan also have claims.

A senior official of ONGC Videsh, who asked not to be named because of the sensitivity of the matter, said interest in the block was strategic rather than commercial, given that oil development there was seen as high-risk with only moderate potential. “Vietnam also wants us to be there because of China’s interventions in the South China Sea,” the official said.

Vietnam’s state-run PetroVietnam declined to comment on the concession, which was first granted to India in 2006 but had been due to expire in mid-June. Conflicting territorial claims over the sea stretch back many decades but have intensified in recent years as China and its rivals have reinforced their positions on the rocks and reefs they hold.
Far to the south of block 128, drilling has begun in a block owned jointly by Vietnam’s state oil firm, Spain’s Repsol and Mubadala Development Co of the United Arab Emirates.