Offshore exploration tender issued by CNOOC

China's leading offshore oil producer, the state-run CNOOC, has issued a tender on the company website yesterday inviting IOCs to bid to participate in the exploration of 25 oil and gas blocks, the majority of which are located in the South and East China Sea. The blocks cover a total area of 102,577km², include 10 highly attractive deep-water patches and represent the largest offshore tender offered (in terms of real size) by China since the 1990s.

The announcement is the latest in a series of moves by China to assert its claims in the strategically-located South and East China Sea by launching tenders for oil and gas blocks, as well as frequent diplomatic manoeuvres and shows of military strength. Tellingly, the Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe did not formally meet at the Asia-Pacific Economic Co-operation summit last week, following an escalation of tensions between the two Asian giants over the sovereignty of the Senkaku/Diaoyu Islands in the East China Sea. Last week, Abe made a defiant statement claiming that Japan would not make any concessions on its territorial integrity.

Two of the newly announced blocks, 33/02 and 41/14 in the Lishui Sag area, are located in close proximity to the disputed Islands, whose purchase by Japan last year reignited the centuries-old question over ownership. The state-run company is also thought to be investing $5 billion in developing submerged gas fields in the East China Sea, with the possibility of tapping gas deposits in Japanese waters through diagonal and horizontal drilling methods. The company has already come under scrutiny this month from Green Dragon Gas, which claims that CNOOC breached production sharing contracts by drilling wells on its licences without notification.

In June, China angered Vietnam by inviting IOCs to jointly participate in the development of nine blocks in the waters around Hainan, blocks which Hanoi considers overlap into their maritime territory. CNOOC's usual operating procedure is to team up with foreign firms during the exploration phase, but holds the right to take a 51% in the block once a commercial find is made. PetroVietnam was involved in a dispute with its northern neighbour last December when Beijing accused it of 'unilateral oil and gas exploration activities'.

For more background on the China-Japan Islands dispute, please refer to our previous news story dated 30 September 2013.

China, Vietnam reach border agreement

Thanh Thuy Border Gate

Three bilateral agreements on borders and landmarks between Vietnam and China took effect on Wednesday 14th July, eight months after they were signed. The accords include a Protocol on Border Demarcation and Marker Planting, an Agreement on Border Management Regulations and an Agreement on Border Gates and Border Management Regulations.

Vietnamese Deputy Foreign Minister Ho Xuan Son said "These legal documents have officially ended a 36-year land border settlement process between Viet Nam and China," during a ceremony to honour the agreements at the Thanh Thuy border gate between Vietnamese province Ha Giang and Chinese province Yunnan.

Vietnam and China share a 1,450km-long border, including 384,000km of rivers and streams. On 27th December 2001, the first border marker was installed at the Mong Cai border post between Vietnam and Dongxing, China, following a 1999 treaty on land borders between the two countries. By 31st December, 2008 the border demarcation was declared complete; in total 1971 marker posts had been installed, including one that accords with a Vietnam-Laos-China agreement.

The history of conflict between China and Vietnam predates Western interference. Vietnam was a tributary of the China’s Qing dynasty, until the French invaded in 1858, and by the 1890s Vietnam, Cambodia and Laos were all French colonies. The Japanese occupied Vietnam during the Second World War after which the Viet Minh fought the French for Vietnam’s independence. China was involved with both sides: Mao Zedong's communist CCP backed the Viet Minh, while Chiang Kai-shek’s Kuomintang nationalists whom the Communists eventually defeated in 1949, backed the French restoration. After the decisive 1954 battle of Dien Bien Phu, when the French were comprehensively defeated by the Viet Minh, they quickly left Vietnam and the July 1954 Geneva Accords divided the country into North and South Vietnam.

Throughout the second Vietnam War which began in 1959 between the Viet Minh and the US backed South Vietnamese, both the Chinese and the Soviet Union supported the North, despite the fact that relations between the Chinese and Soviets had soured since the late 1950s. The North Vietnamese drifted towards the Soviet Union throughout the 1960s, and relations deteriorated between Vietnam and China further in the 1970s, especially as the latter reoriented its foreign policy towards the USA.

Conflict broke out between the two countries in 1979 over Vietnam’s role in Cambodia. Vietnam had invaded Cambodia in late 1978 in order to remove the virulently anti-Vietnamese Khmer Rouge, who were demanding land from Vietnam and massacring ethnic Vietnamese in Cambodia. China was supporting the Khmer Rouge and therefore invaded North Vietnam in February 1979 in an effort to force Vietnam to withdraw from Cambodia, although the official explanation had more to do with the disputed Spratly Islands. The Chinese forces got as far as Hanoi before withdrawing, conducting a ‘scorched-earth’ campaign in the north on their way out, but both countries claimed victory because Vietnam was not forced to alter its plans in Cambodia.

Border skirmishes continued through the 1980s and a naval conflict occurred in 1988 over the Spratly Islands. The conflict ended in 1989, when Vietnam withdrew from Cambodia, but it took another 10 years before a treaty was signed designating a border, which remained secret.

The ceremony on 14th July 2010 marked the culmination of moves towards cooperation, and the two countries have agreed to establish a Vietnam-China Joint Committee on Land Border to manage the border. The construction of a highway between Vietnam’s capital of Hanoi and Kunming, which is the capital of Yunnan province, is underway.

The ownership of the hundreds of Spratly Islands and other parts of the South China Sea is still disputed between Vietnam, China, and other countries in the region. While the islands themselves are uninhabited, it is thought that the region may contain large reserves of oil and gas although this has not yet been proven.

Sources: Asia News Network, Thanh Nien News