$1 billion Deepwater exploration for China stirs storm in South China Sea
Currently the China state-owned CNOOC’s 981 rig, is providing the Chinese with the capability to drill 3,000 metres for the first time, and is located south of Hong Kong, but Chinese energy experts report that plans are to relocate China’s first ultra-deepwater rig to the south of the South China Sea. This area is thought to have deeper and more oil-rich waters, cited as ‘the next Persian Gulf and believed to contain 70% of the oil and gas resources in the South China Sea up to 4,700 meters deep, but where China, Vietnam, the Philippines, Taiwan, Malaysia and Brunei have overlapping territorial claims. Vietnam, the Philippines and allies the USA have been the most vocal opponents of Chinese activity in the area.
For China, the world’s largest energy user, deepwater exploration in the South China Sea is hoped to provide the answer to declining onshore production.
CNOOC, is an $89 billion company with oil and gas assets in Indonesia, Iraq, Australia, Africa, North and South America, as well as China and officially commented,”Large deepwater drilling rigs are our mobile national territory and strategic weapon for promoting the development of the country’s offshore oil industry,” . CNOOC, which derives nearly all its domestic output from shallow waters, plans a deepwater capacity of one million barrels of oil equivalents per day by 2020, more than doubling the company’s total production.
