Upstream Development Hit by Tensions in East, South China Seas

China also reached out to Brunei during Li’s visit to the Southeast Asian state. China National Offshore Oil Corp. (CNOOC) signed an agreement in October with Brunei National Petroleum Company Sendirian Berhad to set up a joint venture of oilfield services. China and Brunei also “agree to support relevant companies of both countries to carry out joint maritime development, and to explore and exploit offshore oil and gas resources,” CNOOC said in an Oct. 11 press release.

But China’s efforts to engage some of these claimant states in the South China Sea dispute was jeopardized when the Chinese Defense Ministry deployed its sole aircraft carrier Liaoning to the area on a “training mission” in late November. The presence of the Liaoning in the South China Sea raised concerns over China’s intentions in the disputed area, coming a few days after China declared an ADIZ over the East China Sea.

"The Chinese authorities have been adopting a series of measures to strengthen their claim on the sovereignty of the disputed territories … Japan and Southeast Asian countries have also been making gestures and taking steps to strengthen sovereignty, so China has to respond," Joseph Cheng, political science professor at City University of Hong Kong told Reuters.

While China presses its claims to the disputed areas in East and South China Seas, Japan and the affected Southeast Asian countries are equally unyielding in challenging Beijing’s position. The standoff meant that upstream oil and gas activities in the disputed areas have become hostage to geopolitical developments in the region.

Industry observers believed that tensions between China and its neighbors are not expected to escalate further.

The recent Chinese moves in East and South China Sea is just “saber rattling,” Jason Waldie, associate director at Douglas Westwood Pte. Ltd. told Rigzone, adding that China’s offshore oil and gas industry players are not dwelling on the matter and carrying on business as usual.


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