By Gao Suying, Capital Week
(Courtesy: http://china-wire.org/?p=16390)
The current situation has reflected a lack of ocean strategy, under which, China has been under a passive state when confronting with surrounding countries in disputed waters
China’s maritime strategy is being tested after oil drillers funded by hundreds of countries having flooded into the South China Sea, with India the latest in the rush for oil despite protests from China, who claims sovereignty over the waters.
“The signing of the agreement between India and Vietnam in oil and gas development in the disputed region has an obvious intent to ‘rock to the boat’,” a person told the Capital Week.
Behind such a deal are clouts from the United States and Russia, analysts say, adding that a joint activity between India and some other countries as a counterweight against China should also not be ruled out.
India “rocks the boat”
India’s Oil and Natural Gas Corporation (ONGC) announced on October 12 that its overseas investment arm ONGC Videsh reached a three-year agreement with Vietnam Oil and Gas Corporation, or the PetroVietnam for developing long-term cooperation in the oil sector, including oil in the South China Sea, in part of which Vietnam also claimed sovereignty.
That came one day after Vietnam signed an agreement in principle to solve disputes over South China Sea.
China last week warned India to abandon its agreement with ONGC and stay away from disputed waters of the South China Sea. “The fact that China and Vietnam have agreed to settle maritime disputes through negotiations has nothing to do with a third party,” China foreign ministry spokesman Liu Weimin said, adding that any third parties should respect the bilateral efforts between parties concerned to resolve the disputes.
India’s intention of the intervention, which has complicated the issue, is no other than “rocking the boat,” an industry source who did not want to be named told Capital Week.
India is well likely to sell some of the projects involved in the Vietnam agreement to western countries, as it doesn’t have an edge in technologies of deep-water oil-gas exploitation, compared with China and western countries, according to the source.
Further, for a country where 70 percent of oil it requires depends on importation, it is far from a bargain to develop deep-water oil-gas fields in South China Sea, due to higher cost than importing costs of oil from the Middle East region, the person added.
“That is not in line with business logic, technologically or financially, and its (India’s) intention to rock the boat is very clear,” the person said.
Driven forces behind India & Vietnam Deal
Oil has become a key for Indian economy to retain a sustainable growth, as an increase of five dollars in oil prices is expected to drag down growth by 0.5 percent and add 1.4 percent to inflation, official data showed.
In New Delhi’s energy strategy, which stretches for oil and gas resources from three directions, the northern line is the most difficult to develop, another industry source told reporters.
Russia had been opposed to the transportation of gas from Central Asia, Russia’s backyard, down to India, until July 2011 when it advanced cooperation with China in energy sector. The line stretches from Turkmenistan, to Afghan, Pakistan and then to India, taking place of the existing line from Central Asia to China and then India.
The person said Russia would hope to provide technological support in the construction of the supposed line for more say in the line, which, obviously, would violate others’ interests.
So, based on strategic energy demands, the Unites States and Russia would be probably behind the development of disputed oil and gas blocks in South China Sea between India and Vietnam, according to the resource.
He explained further that the United States is likely to provide technological support for India while Russia is expected to co-operate with Vietnam to counterbalance China.
Back in 1980s, in fact, Russia (then Soviet Union) had helped Vietnam develop eight oil blocks in South China Sea, one of which had an annual production of 130,000 toones, according to public data available.
China’s maritime strategy being tested
So far, Vietnam has controlled as much as 30 islands in South China Sea, a country that has contended with China fiercely in recent times. The oil-gas blocks it published pending for international bidding include most of the waters of South China Sea.
Some 40 islands in the South China Sea are now subject to encroachment while a total of 800,000 square kilometers of waters are claimed whole or partial sovereignty by surrounding countries. There are now more than 1,000 offshore wells being operated in the region with annual production of nearly 30 million tons. However, none of them belongs to China.
“Beijing’s mercurial approach to strategy in nearby waters may be attributed in part to the fact that it lacks a maritime strategy yoking various implements of national power to national policy,” the U.S. Jamestown Foundation said in its China Brief issued in April 2011.
It also cited Rear Adm. Yin Zhuo, chairman of the Expert Committee on Navy Informationalization as saying that “China does not have a clearly defined ocean strategy at the national level.”
China has a growing economic dependence with surrounding countries and regions, but at the same time, disputes over maritime development highlight challenges facing China with intervention of periphery forces, an analysis paper obtained by Capital Week showed.
The current situation has reflected a lack of ocean strategy, under which, China has been under a passive state when confronting with surrounding countries in disputed waters, it said.
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