CNOOC extends rig deployment in South China Sea

OREANDA-NEWS. August 28, 2015. Chinese state-controlled oil firm CNOOC will extend deployment of an ultra-deepwater drilling rig in the disputed South China Sea, despite it being the cause of a diplomatic row between China and Vietnam last year over their respective maritime boundaries.

The company's Hai Yang Shi You 981 rig will extend drilling mainly at the Lingshui 17-2 gas field it discovered last year from 24 August until 20 October. Its current position is some 72 nautical miles (130km) off Sanya city in south China's Hainan province, China's maritime safety administration said.

Tensions escalated last May with the sinking of a Vietnamese vessel after the CNOOC rig carried out drilling near the Paracel islands, near Sanya and 220km from the Vietnamese coast.

China has increased its assertion in the region, arguing it has territorial sovereignty to what some southeast Asian nations called their exclusive economic zones. A US Department of Defense report on 21 August said China's land reclamation programme, which has infuriated its neighbours, has extended further than previously thought.

"China has now reclaimed 17 times more land in 20 months than the other claimants combined over the past 40 years, accounting for approximately 95pc of all reclaimed land in the Spratly islands," the report said.

But the Philippine military said it expects the US to increase military drills to counter China's action. Manila has sought international arbitration over China's territorial claims, with the first hearing at The Hague in the Netherlands last month.

CNOOC has stepped up drilling despite budget cuts this year, raising domestic output by 19.1pc to 860,000 b/d of oil equivalent in January-June. It drilled 17 wells at 16pc lower costs this year. The 12 August chemical explosion in northeast China's Tianjin has not affected exploration work in the Bohai sea, a company source said. But the management is tightening safety regulations for oil and gas storage tanks in the area.