Thursday, June 28, 2012

A bid protest of a different sort

Sort of like having your neighbour down the street bang up a "For Sale" sign in your front yard, or burrow as the case may be.

Vietnam says China offshore oil auction 'illegal'
On Saturday, the China National Offshore Oil Corporation announced that nine offshore blocks were available for exploration, and said it was seeking bids from foreign companies.

Vietnam's foreign ministry said in a statement late Tuesday that the blocks "lie entirely within Vietnam's 200-mile exclusive economic zone."

"This is absolutely not a disputed area. (CNOOC's move) is illegal and of no value, seriously violating Vietnam's sovereignty," it said, blaming the bid invitation for "causing tension" in the South China Sea.

The blocks, which cover an area of more than 160,000 square kilometres (64,000 square miles), overlap blocks which PetroVietnam is already in the process of developing with its own foreign partners, Hau said.

"PetroVietnam will send an official letter of protest and request the cancellation of the Chinese tender," he said, adding they would also "protest until the end" any companies who signed contracts with CNOOC in the area.

On Saturday, CNOOC announced the nine blocks were "available for international exploration and development cooperation between CNOOC and foreign companies."

The tender was "normal business activity", Chinese foreign ministry spokesman Hong Lei told a regular news briefing on Tuesday.

"We hope Vietnam will respect these agreements and avoid taking any action that may complicate the matter," he said
Nation protests Chinese oil bids
Nghi stressed that the invitation of bids for an area in Viet Nam's exclusive economic zone and continental shelf by China was an illegal and void activity that seriously violated Viet Nam's sovereign rights, jurisdiction right and legitimate national interest as well as the 1982 UN Convention on the Law of the Sea to which China itself is a member. He added that the move complicated the situation and caused further tensions in the East Sea.

MVP to drop oil hunt should sovereignty issues arise
Manuel V. Pangilinan said yesterday he will drop the plan to explore for oil in Recto Bank, part of the disputed Spratlys Islands, once sovereignty issues materialize.

Earlier, President Aquino said that he has no problem with the group of Pangilinan asking China National Offshore Oil Corporation as a partner in the oil hunt.

As this developed, AP reported that Vietnam has protested CNOOC’s posting of bids for energy development in the disputed South China Sea.

“We made it clear to our government that if we cannot resolve our sovereignty issues to the satisfaction of our government, we are prepared to not proceed with the project,” Pangilian told reporters after the stockholders meeting of Philex Mining Corp., which he chairs. Philex Petroleum, which went public in September, is a subsidiary of Philex Mining, the country’s largest mining firm.

The negotiations for a possible joint gas exploration in Recto Bank came amid a standoff at the Panatag (Scarborough) Shoal off Zambales involving Philippine and Chinese vessels.

Vietnam Warns China to Halt Oil Bids in Area Awarded to Exxon
China’s blocks overlap with Vietnamese areas that have been awarded to Exxon, Moscow-based Gazprom (OGZD), India’s Oil & Natural Gas Corp. and Talisman Energy Inc. (TLM), according to a PetroVietnam map distributed to reporters in Hanoi.

The invitation for bids came as Vietnam’s parliament passed a law reasserting its sovereignty over the area. China summoned Vietnam’s ambassador June 21 to protest the move, with Vice Foreign Minister Zhang Zhijun saying Vietnam’s actions weren’t “conducive to peace and stability.”

China hopes Vietnam will “not take actions that will amplify or complicate the dispute,” Foreign Ministry spokesman Hong Lei said yesterday in Beijing. “At the same time, Vietnam should stop its activities that infringe upon China’s rights and interests.”

The area “lies entirely within Vietnam’s 200-nautical mile exclusive economic zone and continental shelf,” Luong Thanh Nghi, a spokesman for the Ministry of Foreign Affairs, said in comments posted on its website June 25. “This is absolutely not a disputed area.”

The location of the blocks indicates that China claims the maritime spaces within its so-called nine-dash map of the sea, a development that will further alarm claimant states, according to Clive Schofield, director of research at the Australian National Centre for Ocean Resources & Security.

“There are highly likely to be future clashes should there be actions taken by any of the countries concerned to try and explore within those blocks,” he said. “The designation of blocks is in a sense a proxy way of states trying to reinforce their jurisdictional rights.”

In 1992, China awarded Crestone Energy Corp. a block off Vietnam’s southern coast that is now owned by Houston-based Harvest Natural Resources Inc. (HNR) Talisman, an oil and gas producer with operations in North America, the North Sea and Indonesia, owns the rights for Vietnam.

Routine patrols in the area by China’s maritime surveillance ships coupled with China National Offshore’s enhanced ability to operate in deeper waters has emboldened the country to assert its claims in the area, according to Gary Li, head of marine and aviation forecasting at Exclusive Analysis Ltd., a London-based business advisory firm.

“The Chinese in the next six months are very likely to demonstrate to potential partners their ability to muscle in on these blocks,” he wrote. “So expect more patrols, high profile propaganda announcements and puff pieces on Cnooc personnel.”

Vietnam Oil Firm Protests Chinese Plans
Cnooc's move is likely influenced by a desire to see how far it can press its claims in the sea rather than entirely commercial considerations, analysts and diplomats say. Few foreign firms are likely to engage in drilling in such disputed waters, especially after Vietnam's protests.

"There is no way any foreign company will go there," said Laban Yu, head of oil and gas research at Jefferies Hong Kong Ltd., a securities and investment banking firm. "This is just Cnooc being used by the central government to make a statement."

"Either Cnooc is doing national service and helping Beijing push the boundary of the South China Sea maritime dispute, or it's doing what analysts have been calling for" and pursuing foreign help to increase the size of its reserves, said Simon Powell, head of Asian oil and gas research at CLSA.

Mr. Powell added that the resources there are more likely to be gas than oil, and thus less attractive to potential foreign partners. "Given how low natural-gas prices are in China, the distance of these blocks from the mainland and how uneconomic it is to lay pipelines and run gas from such distances, maybe the offerings are more about politics than about earnings," he said.

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