China puts Indian oil block up for auction

Drawing India into the South China Sea muddle, China has put up a Vietnamese petroleum block under exploration by an Indian oil firm for global bidding.

While the move was meant to counter a Hanoi legislation asserting the country's control over offshore areas and islands, which Beijing considers disputed, it has put Delhi in a spot as Vietnam is now keen that India does not vacate this block.

As a result, New Delhi for the first time went beyond its usual call for "freedom of navigation" in South China Sea at last week's ASEAN Regional Forum meet in Cambodia and added the demand for "access to resources in accordance with principles of international law". This shift in stand, sources said, was largely provoked by the Chinese decision to bid out a block already given to India.

The block numbered 128, which has been contracted to ONGC Videsh Ltd (OVL), was part of the nine petroleum blocks that were placed for global bidding by China Offshore Oil Corporation (CNOOC) last month. Over the past few weeks, the blocks put up for bidding were compared to existing blocks already given out by Vietnam in the same area.

The results, which have now also been confirmed by reputed energy-specific publication Platts, show that a substantive part of block 128 is also covered by the grid of blocks put up for offer by CNOOC.

Vietnam had reacted sharply stating that all these blocks fall in its Exclusive Economic Zone and are in accordance with the United Nations Convention on the Law of Sea (UNCLOS).

Incidentally, OVL had decided to exit this block a couple of months ago because it had failed to start drilling activity as per the timeline worked out in the original contract. On its part, OVL maintained that its surveys had not shown much promise for any big finds.

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