South China Sea tensions will not deter offshore pursuits: OVL
The South China Sea may be troubled, but India’s overseas energy explorer that operates in its
waters is not perturbed.
ONGC Videsh Ltd (OVL) which has two offshore blocks in South China Sea allotted by Vietnam does
not perceive any threat to production, an OVL director said on condition of anonymity.
He said the output from these blocks goes to Vietnam for domestic consumption and not exports
that require tanker movement in the contested waters.
OVL is the overseas arm of India’s state-owned explorer Oil and Natural Gas Corp. Ltd.
Vietnam accounted for nearly a quarter of OVL’s total hydrocarbon output of 5.5 million tonnes (mt)
of oil and 3.3 billion cu. m (BCM) of gas in 2014-15.
Tensions mounted after China rejected a 12 July ruling of the Permanent Court of Arbitration in The
Hague, which said that Beijing’s claims over most of the South China Sea have no legal basis.
China also said that it would set up an air defence identification zone in the region.
The ruling came after the Philippines took its territorial dispute with China to the international
arbitration court.
In the past, China has objected to India’s hydrocarbon exploration projects in the South China Sea,
off the coast of Vietnam, asserting its sovereignty over the area covering the two blocks.
However, ONGC Videsh continued exploration after Vietnam reaffirmed its sovereign rights.
New Delhi has been maintaining that ONGC’s participation in Vietnamese exploration projects are
purely commercial, and that while it supports freedom of navigation in international waters,
sovereignty issues must be peacefully resolved by countries that are parties to the dispute as per
international law.
Sovereignty over parts of South China Sea is claimed by many countries in the region, to which India
is not a party, according to a Rajya Sabha statement by minister of state for external affairs V.K.
Singh on 4 December 2014.
“There is no question of big tankers coming in and going out of the two blocks which we have been
holding for a long time. Secondly, the tribunal’s verdict says that China is in violation of international
law. If there is any flare-up in the region, the international community will view it seriously,” the OVL
director quoted above said.
OVL holds a 45% stake in block 6.1 about 375km off the Vietnam coast, in which Rosneft Vietnam
B.V. holds 35% and Vietnam Oil and Gas Group (Petro Vietnam) 20%.
There are also two gas condensate fields at the block—Lan Tay and Lan Do—which are pumping gas
since 2002, according to a background on the fields made available by Rosneft.
OVL has completed the first phase of exploration in Block 128 that it fully owns, off the Vietnam
coast.
“We will keep assessing further opportunities that come up from time to time,” the director cited
above added.
In 2014, ONGC Videsh agreed with Petro Vietnam for expanding exploration work to two more
blocks, subject to viability. ONGC’s other major producing assets are in Russia, Brazil, Colombia and
Myanmar. It has set a target of producing about 5.4 mt of oil and 3.2 BCM of gas, respectively, from
all its assets in 2015-16.
According to a January 2016 report of the International Crisis Group, a Brussels-based not-for- profit
agency working for prevention of conflicts, the significance of the potential hydrocarbon reserves in
South China Sea is first and foremost p olitical as entitlement to them derives from sovereignty over
land according to principles of the UN Convention on the Law of the Sea. Disputes over oil and gas
prospecting, thus, have ramifications that extend well beyond division of resources, it said in the
report titled Stirring up the South China Sea: Oil in Troubled Waters.
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