China Finishes Drilling Operations In Disputed Region Of South China Sea Near Vietnam

   on July 16 2014 2:06 AM
  • Chinese Rig_South China Sea
    Chinese oil rig Haiyang Shi You 981 (C) is seen surrounded by ships of the China Coast Guard in the South China Sea, about 210 km (130 miles) off shore of Vietnam, May 14, 2014. Reuters/Nguyen Ha Minh
  • Chinese Oil Rig_Vietnam_South China Seajpg
    Chinese coastguard ships give chase to Vietnamese coastguard vessels (not pictured) after they came within 10 nautical miles of the Haiyang Shiyou 981, known in Vietnam as HD-981, oil rig in the South China Sea on July 15, 2014. Reuters/Martin Petty
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State-owned China National Petroleum Corporation, or CNPC, said in a statement Wednesday that a rig it had moved to a disputed region of the South China Sea in May, has "smoothly completed" its drilling after finding signs of oil and gas.

The rig, which was deployed on May 2 and had set off deadly anti-Chinese riots in Vietnam, while vessels from naval forces of both countries squared off around the platform, leading to several collisions, and a flaring up of tensions between Beijing and Hanoi. Vietnam said the rig was drilling inside its 200-nautical-mile exclusive economic zone and on its continental shelf, while China claimed the rig was operating within its waters around the Paracel Islands, which it controls.

CNPC's preliminary analysis showed "the area has the basic conditions and potential for oil exploration, but extraction testing cannot begin before a comprehensive assessment of the data," Wang Zhen, deputy director of the CNPC Policy Research Office, said, according to Xinhua. China will now analyze the geological data and the layers of oil and gas found at the location, the report added.

CNPC, which has been exploring the area since 2004, began drilling two wells in May and completed the work on May 27 and Tuesday respectively, as part of the operations known as the Zhongjiannan Project. The drilling rig, owned by state-run China National Offshore Oil Company Group, will now be relocated to operations in the Hainan Islands, Xinhua reported.

A Reuters journalist on a Vietnamese coastguard vessel reportedly witnessed on Tuesday a group of Chinese ships chase a Vietnamese boat away from the area in what has been a near daily routine between the two countries.

China claims about 90 percent of the South China Sea while Vietnam, the Philippines, Malaysia, Brunei and Taiwan also claim portions of the sea. China, which is the world's largest energy user, imports about 60 percent of its oil and more than 30 percent of its natural gas needs, according to Reuters. Chinese experts had reportedly predicted the rig to provide the country its first viable energy field in the South China Sea. 

Vietnam has two fields in the vicinity of the Chinese rig near its coastline where Exxon Mobil Corp (NYSE:XOM) had discovered oil and gas in 2011 and 2012, Reuters reported, adding that while the South China Sea produces some oil and gas, territorial disputes in the region have discouraged further exploration of deepwater areas.

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