China Keeps on Drilling in Disputed Vietnam Waters

A Chinese oil rig at the centre of last year's standoff between China and Vietnam will continue drilling not far from Vietnam's coast, China's maritime safety authorities said on Tuesday.

The deployment of the $1 billion deepwater rig last year about 120 nautical miles off Vietnam's coast, in what Vietnam considers its exclusive economic zone (EEZ), led to the worst breakdown in relations since a brief border war in 1979.

China said at the time the rig was operating completely within its waters.

The rig, called the Haiyang Shiyou 981, was removed last July, but returned to the area in June of this year to explore for oil and gas. A notice from China's Maritime Safety Administration said at the time that the rig would carry out "ocean drilling operations" until Aug. 20.

In a new notice posted on its website (http://www.msa.gov.cn/), the Maritime Safety Administration said that the rig will continue drilling at a position slightly to the north until Oct. 20.

On Monday, state media said the rig had completed an exploratory well at its earlier placement.

The rig's intended coordinates put it roughly 110 nautical miles east of the Vietnam coast and 72 nautical miles south of the resort city of Sanya on China's Hainan Island.

China claims most of the potentially energy-rich South China Sea, through which $5 trillion in ship-borne trade passes every year. The Philippines, Vietnam, Malaysia, Brunei and Taiwan also have overlapping claims.

Vietnam's people remain embittered over a perceived history of Chinese bullying and territorial claims in the South China Sea.

China has been increasingly assertive in the South China Sea, condemning an arbitration case initiated by the Philippines and reclaiming land on islands and reefs under its control.

Last week a new U.S. Pentagon report said China has reclaimed more land in the disputed Spratly Islands than previously known.

The Haiyang Shiyou 981 rig is owned by state-run  (CNOOC), China's largest producer of offshore oil and gas, the parent of list CNOOC Ltd. (CEO).

The company was not immediately available for comment. (Reporting By Adam Rose