BEIJING, Nov 21, 2006 (Dow Jones Newswires)
China National Offshore Oil Corp. and PetroChina Co. Ltd. (PTR) have signed deals to ramp up investment in Vietnam as leaders in Beijing and Hanoi set aside a long-running maritime border dispute to forge closer energy ties, state media reported Tuesday.
CNOOC signed an agreement with Vietnam Oil & Gas Corp., or PetroVietnam, on Friday to begin exploring for oil in the Gulf of Tonkin in the South China Sea on a 50-50 basis.
The exploration period is expected to last between three and five years, China Oil News said on its Web site without specifying when it would begin or the size of the investment involved.
Expectations of oil and gas finds are high, as the area is ringed by proven natural gas finds, including Vietnam's Nam Con Son gas project to the west, and oil-rich ones being pumped by Malaysia and Brunei to the south.
Steven Knell of London-based consultancy Global Insight said the joint venture had been in the cards since August when China and Vietnam issued a joint communiqué paving the way for a resolution of the dispute over the maritime border, notably around the Spratly Islands.
Military clashes between the two countries took place in 1988 and 1992 over the maritime border.
"A final settlement on the matter of the boundary is expected in 2008, but that will not stand in the way of exploration and production work in the meantime," Knell said.
Separately, PetroChina signed a $432 million deal to become the contractor for a fertilizer plant in Vietnam, representing the largest individual project in terms of investment by a Chinese company in the country, according to China Oil News.
This project will produce 320,000 metric tons of synthetic ammonia and 560,000 tons of urea annually as well as involve the construction of a 36 megawatt power station. It is expected to begin operation in 42 months' time.
The deals were concluded during Chinese President Hu Jintao's visit to Vietnam last week for the Asia-Pacific Economic Cooperation forum.
Copyright (c) 2006 Dow Jones & Company, Inc.
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