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China puts Indian oil block up for auction

South China Sea: In Beijing’s move against Hanoi,New Delhi gets dragged into diplomatic mess

Drawing India into the South China Sea muddle,China has put up a Vietnamese petroleum block under exploration by an Indian oil firm for global bidding.

While the move was meant to counter a Hanoi legislation asserting the country’s control over offshore areas and islands,which Beijing considers disputed,it has put Delhi in a spot as Vietnam is now keen that India does not vacate this block.

As a result,New Delhi for the first time went beyond its usual call for “freedom of navigation” in South China Sea at last week’s ASEAN Regional Forum meet in Cambodia and added the demand for “access to resources in accordance with principles of international law”. This shift in stand,sources said,was largely provoked by the Chinese decision to bid out a block already given to India.

The block numbered 128,which has been contracted to ONGC Videsh Ltd (OVL),was part of the nine petroleum blocks that were placed for global bidding by China Offshore Oil Corporation (CNOOC) last month. Over the past few weeks,the blocks put up for bidding were compared to existing blocks already given out by Vietnam in the same area.

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The results,which have now also been confirmed by reputed energy-specific publication Platts,show that a substantive part of block 128 is also covered by the grid of blocks put up for offer by CNOOC.

Vietnam had reacted sharply stating that all these blocks fall in its Exclusive Economic Zone and are in accordance with the United Nations Convention on the Law of Sea (UNCLOS).

Incidentally,OVL had decided to exit this block a couple of months ago because it had failed to start drilling activity as per the timeline worked out in the original contract. On its part,OVL maintained that its surveys had not shown much promise for any big finds.


The preference,at that time,was to wait a little longer as timeframe is crucial in petroleum exploration. But as that would be against the contract,the company had decided to exit without much delay. OVL had earlier returned the adjoining block 127 on the same grounds.

Soon after,sources said,Petrovietnam had approached OVL with fresh terms and conditions,which allowed OVL two more years for exploration. The offer,which is still under discussions,is said to be attractive and OVL is said to be inclined to extend its exploration activity in block 128.

New Delhi has a crucial decision ahead seeking to achieve a diplomatic position on the issue. Chinese assertiveness and clout,sources said,was visible at the ASEAN and ARF meets in Phnom Penh last week.


For the first time,ASEAN could not come out with a joint communique because the member countries failed to reconcile on the mention of Chinese claims in South China Sea. China is learnt to have leaned heavily on Cambodia,the host and chair of the meet this year,to take the line that these were bilateral issues of individual countries which should not be part of multilateral discussions.

In the ARF too,which comprises partner countries of the ASEAN like India,US,China and European Union among others,Pakistan went along with China and said these were historical claims that ought to be decided bilaterally and not be subjugated to the international law of sea. The western countries contested this,leading to wider disagreements.

India,which usually takes a nuanced line,was slightly more vocal this time: “We have been following developments in respect to the South China Sea. As we had stated earlier,India supports freedom of navigation and access to resources in accordance with principles of international law. These principles should be respected by all.”

First published on: 17-07-2012 at 03:15 IST
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