China Optimistic of Finding Gas Offshore Vietnam

A Chinese oil rig whose deployment to waters claimed by Vietnam early this month triggered a rupture in ties has a good chance of finding enough gas to put the area into production, Chinese industry experts said.

That would give China its first viable energy field in the disputed South China Sea, as well as make it a source of friction with Hanoi for years to come.

For now, China has said nothing about the potential of the area. The first round of drilling had been completed, the rig operator said on Tuesday, without giving any results from the tapped wells.

The $1 billion deepwater rig owned by state-run China National Offshore Oil Company Group (CNOOC Group), parent of flagship unit CNOOC Ltd, is scheduled to explore until mid-August.

"The place where the rig is drilling at the moment is likely to be a gas field. China conducted three-dimensional geological surveys before moving the rig there," said Wu Shicun, president of the National Institute for South China Sea Studies, a Chinese government think-tank on the southern island of Hainan.

"China is pretty confident ... otherwise they wouldn't start drilling," added Wu, a leading expert on China's ambitions in the South China Sea.

China National Petroleum Corporation (CNPC), the dominant oil and gas producer in China, owns the block being drilled but has given it no name, Chinese officials said. The world's largest energy user imports nearly 60 percent of its oil needs and more than 30 percent of its natural gas.

Background
Deployment of the rig on May 2, 2014 set off deadly anti-Chinese riots in Vietnam while scores of Vietnamese and Chinese ships remain squared off around the platform. There have been several collisions.

The rig lies approximately 330 km (205 miles) east of Vietnam and 370 km from the southern coast of Hainan. It is just below the Paracel island chain occupied by China and claimed by Hanoi.

(By Charlie Zhu)