China/Malaysia/Vietnam/South China Sea: Oil On Troubled Waters

Jan 24, 2015 | Economist
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Two Chinese oil companies show contrasting approaches in their attempts to operate in the South China Sea where, to the discomfort of its smaller neighbours, China’s claims in disputed waters have grown increasingly assertive. One company’s actions are adding to tensions in the area, while the other’s may hint at a way to ease them.

Last July Brightoil, a company listed in Hong Kong with high-level political connections on the mainland, bought the exploration rights to 6.2m acres (2.5m hectares) of seabed from an American company, Harvest Natural Resources. The block, which the Chinese call Wan’an Bei 21 (WAB-21, part of an area known in English as the Vanguard Bank), has a controversial history. Although it lies more than 650 nautical miles (about 1,200km) from the Chinese coast and just 200 nautical miles from Vietnam, China asserts “historic rights” over the area. It lies near the south-western edge of the U-shaped “nine-dash line” that marks Beijing’s ambiguous claim in the sea.