18 - 10 - 2017 | 23:19
  • Increase font size
  • Default font size
  • Decrease font size
Home Publications Vietnamese Publications Chinese Offshore Oil Company Fuels South China Sea Tension

Chinese Offshore Oil Company Fuels South China Sea Tension

E-mail Print PDF

CNOOC is using Western technology to further Chinese territorial claims.

alt

The China National Offshore Oil Company (CNOOC) announced on September 15 that the HD981 oil rig has discovered a new gas field called Lingshui 17-2, some 150 kilometers south of Hainan. However, the gas field’s reserves, which are still being tested, are estimated at an average operational depth of 1,500 meters, signaling that China now has the technological capability to drill anywhere in the South China Sea (SCS).

How has China developed its offshore technology?

CNOOC was established on February 15, 1982 in Beijing in order to develop the offshore oil and gas industry, in line with the Open Door policy initiated by Deng Xiaoping in 1978. The Chinese petroleum industry was at that time under the control of Chinese Premier Li Peng and his deputy Kang Shien.

In the joint book Policy Making in China: Leaders, Structures, and Processes published by Princeton University Press in 1988, Kenneth Lieberthal and Michel Oksenberg discovered that Chinese leaders and petroleum officials had rushed to the U.S., Japan, the Netherlands, Norway and other Western countries to absorb offshore technology. Many delegations traveled to Houston, New Orleans and California to make contact with multinational petroleum companies, and they identified technology of short and longer-term importance. The authors further uncovered a Chinese strategy: to engage each of these companies, stimulate their interest in China, and then play them against each other. China revealed an ability to encourage several foreign entities to believe they were favored and had earned a particular confidence and friendship.

As a result, during the last decade of the 20th century multinational oil companies became major operators and bore the majority of expenses in the concession contracts, and then production sharing agreements (PSC), with the Chinese. Since 2002, when CNOOC for the first time held 51 percent interest in the joint venture QHD 23-6 oilfield with Chevron and BP, it has taken over the operation of most projects. CNOOC has since independently constructed offshore equipment such as the multi-functional investigation vessel HD709 in 2005, the large-scale deep water geographical vessel HD720 in 2010, and particularly, the semi-submersible oil rig HD981 in 2011.

The HD981 for example, is considered a 6th generation semi-submersible rig, which can operate in waters of 3,000 meters. It was designed in two steps: (i) by conducting a comparison of four platforms (the GVA7500m, F&G E&D, Aker H-4.3 and MSC DSS50), finally choosing the F&G E&D as the basis of the HD981; and (ii) through technical innovations in order to suit the extreme sea conditions of the SCS.

The F&G E&D design belongs to the Friede and Goldman Limited (F&G) in Houston. F&G has been a leader and innovator in offshore rig design for more than 60 years. More than 10 percent of the world’s fleet of jack-up rigs, and more than 20 percent of the semi-submersibles, are designed by F&G. In 2010 China Communications Construction Company Limited (CCCC) bought 100 percent of F&G, and viewed the acquisition as an important strategic step in expanding its offshore construction capabilities.

Meanwhile, Thomas M. Hout and Pankaj Ghemawat in the Harvard Business Review took a comprehensive view of Chinese technology, and noted that China is quietly and deliberately shifting from a successful low and middle-tech manufacturing economy to a sophisticated high-tech one by cajoling, co-opting, and often coercing Western and Japanese businesses.

What are the implications for the SCS?

First, CNOOC has become an active player in the SCS dispute. In June 2012, CNOOC offered an international tender for nine oil and gas blocks in the SCS. However, international companies showed hesitation and did not participate in the bidding because the area is within the exclusive economic zone (EEZ) and continental shelf of Vietnam. Moreover, the deployment of the HD981 in May 2014 also illustrates CNOOC’s role. Particularly during the launching ceremony of HD981 in Beijing, CNOOC Chairman Wang Yilin told audiences that large deepwater drilling rigs are “our mobile national territory and strategic weapon.” Meanwhile, Michele Nash-Hoff has argued that the massive acquisition of U.S. enterprises by China, including F&G, is a problem because China is using its companies as strategic tools for territorial disputes.

Second, multinational and international enterprises should be more aware of the “strategic aspect” of their business with Chinese companies for hydrocarbon exploration and development. In other words, helping China develop the capability for deep sea drilling is one thing. However, CNOOC’s international partners should be aware that the way they cooperate with China fuels tensions in the SCS, which could eventually create adverse business conditions.

By Thuc D. Pham

Thuc D. Pham is a SCS researcher at the Diplomatic Academy of Vietnam. The opinions expressed in the article are those of the author and do not represent the views of institutions to which the author is attached. This article was originally published on The Diplomat.


Newer news items:
Older news items:

Comments  

 
0 #1 Chinese Offshore Oil Company Fuels South China Sea TensionElyse 2017-07-07 23:58
Hello guys! Who wants to meet me? I have profile at HotBabesCams.com, we
can chat, you can watch me live for free, my nickname is Anemonalove: https://3.bp.blogspot.com/-u5pGYuGNsSo/WVixiO8RBUI/AAAAAAAAAFA/JWa2LHHFI2AkHParQa3fwwHhVijolmq8QCLcBGAs/s1600/hottest%2Bwebcam%2Bgirl%2B-%2BAnemonalove.jpg ,
here is my photo:

https://3.bp.blogspot.com/-u5pGYuGNsSo/WVixiO8RBUI/AAAAAAAAAFA/JWa2LHHFI2AkHParQa3fwwHhVijolmq8QCLcBGAs/s1600/hottest%2Bwebcam%2Bgirl%2B-%2BAnemonalove.jpg
Quote
 

Add comment


Security code
Refresh

China's 2017 fishing ban a threat to maritime rule-based order

China's 2017 fishing ban a threat to maritime rule-based order

China's 2017 fishing moratorium constitutes a severe violation of UNCLOS, which accords all the countries sovereign rights and jurisdiction over their Exclusive Economic Zones. 

Read more...

Law of the Sea Ruling Reveals Dangerous Chinese Nationalism

Law of the Sea Ruling Reveals Dangerous Chinese Nationalism

The recent ruling by a United Nation Convention on the Law of the Sea (UNCLOS) Arbitration Tribunal of the on a case brought by the Philippines against China has been welcomed by many governments that are concerned about rising tensions in the South China Sea. However, within China it has provoked outpourings of defiance.

Read more...

A fair and effective code of conduct for the South China Sea

A fair and effective code of conduct for the South China Sea

Some people could blame on the DOC's weaknesses when they look at current picture of the South China Sea which is painted with distrust and tensions. The region is in need of having an effective documnent, so-called COC. Yet, what are elements that should be included?

Read more...

US analysis of China’s nine-dash line is correct

US analysis of China’s nine-dash line is correct

Historic fishing activities by the peoples around the South China Sea in what was at that time international waters cannot give China the right to fish in other countries’ EEZs today.

Read more...

South China Sea Disputes: Facts or Fiction?

South China Sea Disputes: Facts or Fiction?

If a country cites international law to justify its position while avoiding having that position tested in court, such use of international law is just rhetoric, and does not deserve support from scholars.

Read more...

Chinese Offshore Oil Company Fuels South China Sea Tension

Chinese Offshore Oil Company Fuels South China Sea Tension

CNOOC is using Western technology to further Chinese territorial claims.

Read more...

South China Sea disputes: Chinese historical evidence found wanting

South China Sea disputes: Chinese historical evidence found wanting

“Historical evidences” of some Chinese scholars are vague, erroneous or blatantly false, relying as they do on uncorroborated evidence, faulty logic, misquotes, misinterpretations and outright inventions.

Read more...

One confrontation, three legal questions

One confrontation, three legal questions

“Is Vietnam or China legally right in this confrontation?”: According to UNCLOS as has been interpreted by the Permanent Court of Arbitration, the answer is definitely Vietnam, regardless of the answers to the first two questions.

Read more...

New ten-dashed line map revealed China’s ambition

New ten-dashed line map revealed China’s ambition

Deliberately and desperately applying irrelevant concepts and provisions of UNCLOS will not create the legal basis for the nine dashed line claim.

Read more...

South China Sea: Rightness is mightness, not vice versa

South China Sea: Rightness is mightness, not vice versa

The oil-rig incident is a reminder to China that mightiness does not bring rightness, it is the other way around.

Read more...

Exposing China’s Artificial Islands Plan in the Spratly’s

Exposing China’s Artificial Islands Plan in the Spratly’s

Rather than dismissing the concerns of its neighbors as part of a political conspiracy, China should come to understand how its own actions contribute to the perception of a Chinese threat, as evident in its plan to construct artificial islands in the Spratly Archipelago.

Read more...

New tensions in the South China Sea

New tensions in the South China Sea

China is not conducting the activities of oil rig within its right and its illegal aggressive action is affecting stability and peaceful environment in the whole region.

Read more...

South China Sea & China's Grand Chessboard

South China Sea & China's Grand Chessboard

China has thrown a ball in to the U.S. court, and it is up to the U.S. to respond firmly.

Read more...

The Paracels: Forty Years On

The Paracels: Forty Years On

China’s act of locating its oil rig in contested waters in the Paracels is more than a dispute over sovereignty. It is also a dispute about international law of the sea.

Read more...

The Paracels: Does China have ‘undisputed sovereignty’?

The Paracels: Does China have ‘undisputed sovereignty’?

China should admit that sovereignty over the Paracels is disputed and withdraw its oil rig from its current location because any drilling that causes permanent change to the seabed in the disputed water is not allowed under international law.

Read more...

The danger of convoluting everything into sovereignty disputes

The danger of convoluting everything into sovereignty disputes

Much of the tensions in the South China Sea could be resolved by applying UNCLOS’s dispute settlement procedure to matters relating to maritime delimitation and cooperation in disputed areas.

Read more...

Sovereignty over Paracels: Article Lets Off Beijing Lightly

Sovereignty over Paracels: Article Lets Off Beijing Lightly

Bateman states that "a negotiated maritime boundary in this area would likely place the rig within China’s EEZ even if reduced weight was given to China’s claimed insular features". A careful analysis suggests just the opposite.

Read more...

Dark cloud caused by China’s oil rig may have a silver lining

Dark cloud caused by China’s oil rig may have a silver lining

A legally binding end to China’s nebulous and maritime claims in these areas would bring enormous clarity, stability and security to at least two thirds of the area that is currently covered by China’s ominous U-shaped line, and could also have positive effects on the Paracels area.

Read more...

Haiyang 981: From Water Cannons to Court?

Haiyang 981: From Water Cannons to Court?

A dangerous clash has flared up between Vietnam and China over the latter’s deployment of an oil rig near the disputed Paracels. One option for Vietnam is to submit the dispute to the UN Convention on the Law of the Sea’s (UNCLOS) compulsory dispute settlement procedure.

Read more...

Reassurance needed, unlikely over the Nine-Dash Line

Reassurance needed, unlikely over the Nine-Dash Line

What would reassure neighbouring nations is for China to bring their claims into the realm of international law and reasonableness. China should be prepared to negotiate in good faith the limits of the disputed area.

Read more...
More:

Language

South China Sea Studies

Joomla Slide Menu by DART Creations

Special Publication

 

Search

Login Form

Subscribe form

Top Photo Galleries

Web Links

VIETNAM MOFA SPOKESPERSON

 

NATIONAL BOUNDARIES