On a proposal by Vietnam recently, ONGC Videsh Limited (OVL), the overseas investment arm of ONGC, has decided to stay invested in Block 128. The decision was taken after Hanoi offered to provide additional data to make future exploration economically feasible and discovering hydrocarbons commercially viable. The reason could be oil & gas journal Platts confirming that Block 128 was one of the nine petroleum blocks put up for auction by China Offshore Oil Corporation (CNOOC) in June 2012. Vietnam has urged China to cancel its bidding for the blocks as they lie 200 nautical miles inside its Exclusive Economic Zone (EEZ) granted under the United Nations Convention on the Law of the Sea (UNCLOS). OVL, which was awarded two offshore exploration of Blocks 127 and 128 in 2004 and 2005 respectively, failed to explore hydrocarbon from the same due to ’techno-commercial consideration’.
On 24 May 2006, the company signed a sharing contract with Petro Vietnam. On 12 October 2011, India signed a pact with Vietnam to promote oil and gas exploration dismissing all claims by China. Meanwhile, oil & gas giants of India and China, ONGC and CNPC too signed a Memorandum of Understanding for pursuing opportunities in future hydrocarbon projects jointly in June 2012. Now with OVL returning to the disputed territory of South China, presumably irking China, its impact on continuation of Sino-India joint exploration overseas, remains to be seen. The two countries are already working jointly in hydrocarbon projects in Sudan, Syria and Myanmar.
According to the Energy Information Administration (EIA), South China Sea is rich in oil & natural gas resources and is contested by countries like China, Brunei, Cambodia, Indonesia, Malaysia, Philippines, Taiwan, Thailand and more importantly Vietnam which holds significant portion based upon its EEZ and continental shelf principle. China claims the territorial waters of South China Sea in full, which the other countries don’t agree to. The dispute in this region is also with two islands namely the Paracels and Spratyls. Former is controlled by China but claimed by Vietnam, while for the latter various countries in questions have some claims or the other. For India it is the Block 128 which matters, as OVL has reconsidered its idea of dropping out. Many voices have started to come out of China against India’s move to explore hydrocarbons from South China Sea. Shen Dingli, Director of the Centre for American Studies of Institute of International Studies at China’s Fudan University, believes, "India’s efforts to firm up oil exploration cooperation with Vietnam in the South China Sea, which China claims as its own is a provocative move to show its annoyance over Beijing building up close ties with countries like Myanmar and Pakistan." China raised its concerns against such move saying it would amount to "infringement" of its sovereignty. India shrugs off Chinese warnings and considers the area well with the jurisdiction of Vietnam waters.
Among other issues, it is the hydrocarbon reserves of the region that are working as a catalyst in the conflict. India’s quest for petroleum resources in this region is making China uncomfortable because this is the first time when India has extended its search of foreign oil assets in a domain largely claimed by China. So far these countries were competing in neutral venues.
Being major energy consumers of the world, the competition gets intensified. According to BP Statistical Review of World Energy 2012, total primary energy consumption of China and India in 2011 was 2613.2 million tonnes of oil equivalent (MTOE) and 559.1 MTOE respectively. This increased by 8.8 percent for China and 7.4 percent for India since 2010. In 2011, the total oil consumed by China and India was to the tune of 461.8 MTOE and 162.3 MTOE respectively. The increase was by 5.51 percent for China and 3.90 percent for India. Oil consumption, which stood at 18 percent for China and 29 percent for India in 2011, is expected to rise to 24 percent and 35 percent respectively in 2030. Moreover, their oil import is also increasing. Further, both China and India will account for 45 percent of total increase in world energy demand over the projection period of 2005-2030.
A COUPLE OF years ago, the Ministry of Petroleum and Natural Gas (MOPNG) had conducted a study on exploration and exploitation of trans-boundary oil and gas resources. The two incidents which called for the study was China’s demarche in 2007 on India joining hands with Vietnam to explore in the disputed South China Sea and problems created in operations in deepwater blocks NEC-DWN-2004/1 and NEC-DWN-2004/2 by the Bangladesh. On 22 November 2007, in a letter to the petroleum ministry, Ministry of External Affairs (MEA) Joint secretary Biren Nanda said, "According to the Chinese diplomat, no countries apart from the disputant parties are involved in such activities (exploiting hydrocarbon resources) in the area."
As per prevailing practice, the Indian government was exploring blocks under New Exploration Licensing Policy (NELP) 10 km inside the International boundary & 10 Nautical miles inside from International Maritime boundary. The aforesaid matter of demarche made by Chinese Embassy in New Delhi was examined by Legal and Treaties Division of MEA, and concluded that both the blocks (127 and 128) in the South China Sea belong to Vietnam, and Chinese claims have no legal basis on the same.
This was reiterated by MEA in reply to a question in the Rajya Sabha. "Sovereignty over areas of the South China Sea is disputed between many countries in the region. India is not a party to this dispute. As two developing countries with growing energy needs, India and Vietnam have been cooperating in the oil and gas industry to enhance their energy security. Government has clearly conveyed that such activity by Indian companies is purely commercial in nature and that ONGC’s decisions are taken entirely on techno-economic criteria. Sovereignty issues must be resolved peacefully by the countries which are parties to the dispute in accordance with international law and practice," said MEA. Joint Development Zone (JDZ) Agreements, is one of such international practices followed during trans-boundary maritime disputes among the states. So the rhetoric from China of India infringing on its sovereignty in South China should come to a halt. India’s action in this region should not in any way come as a deterrent in improving and developing new energy ties with China. Both ONGC and CNPC should continue with their objective of exploring hydrocarbon reserves jointly overseas and consolidating their energy portfolio further. Cooperation rather than competition will bring these countries closer to appreciating each other’s energy security. Hydrocarbon sector is one area to start with.
(Manish Vaid is a Research Assistant at Observer Research Foundation, New Delhi)
Courtesy:
thetehelka.com
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