Vietnam offers ONGC Videsh Ltd contract for exploration in South China Sea

In order to sustain Indian presence in the hydrocarbon-rich South China Sea, Vietnam has decided to extend the contract for exploration of oil and gas resources in a significant oil block in the region to ONGC Videsh Ltd (OVL).
OVL is thinking over to terminate operations in the 128 blocks as it could not start oil exploration due to hard sea bed and looks to quit for techno-commercial reasons. A formal announcement to extend the contract for exploration of hydrocarbons in the block to the overseas arm of ONGC, will happen soon.
All this is happening amid upsurge in tension in the South China Sea with US, India and a number of ASEAN countries, asking China to resolve the confrontation through negotiations with the concerned countries according to international law.

What is the controversy over South China Sea?

  • The whole controversy is over territory and sovereignty of several regions in South China Sea, particularly the Paracels and the Spratlys group of islands which are being claimed by a number of countries.

What is claimed by whom?

  • The largest share of the territory is claimed by China. The area claimed stretches several hundred miles south and east from its most southern province of Hainan. It puts forward a historical claim. It said that from 2,000 years the Paracel and Spratly island chains were considered as integral parts of China.
  • Earlier, in 1947, China issued a map which showed the two islands fully lying in its territory. Those claims are imitated by Taiwan as the island regards itself the Republic of China and has the same territorial claims.
  • Vietnam strongly confronts China’s historical ground, asserting China never claimed sovereignty over the islands until the 1940s. According to Vietnam both island chains are under the purview of its territory. The country gives document proofs of having ruled over both the Paracels and the Spratlys since the 17th Century.
  • The Philippines is another nation on the scene to claim the islands, which cites its geographical propinquity to the Spratly Islands as the central basis of its claim for part of the grouping.
  • Scarborough Shoal (known as Huangyan Island in China) is claimed by both the Philippines and China. The island is a little more than 100 miles (160km) from the Philippines and 500 miles from China.
  • Malaysia and Brunei also extend claim to region in the South China Sea as they claim it falls under their exclusive economic zones, as stated in the United Nations Convention on the Law of the Sea in 1982.
  • No disputed islands are claimed by Brunei, but Malaysia claims a few islands in the Spratlys.

Why these nations are so interested in these archipelagoes?

  • The secret is the presence of huge natural resources around the Paracels and the Spratlys. Although no detailed exploration has been done in the region, the estimates are basically projected taking into account the mineral wealth of neighboring areas.
  • As per Chinese estimate the area contains oil reserves of 213 billion barrels – 10 times the proven reserves of the US. But America estimates the amount of oil at 28 billion barrels.
  • The region is also estimated to have about 900 trillion cubic ft (25 trillion cubic m) of natural gas, the equivalent of the proven reserves of Qatar.
  • The area is also one of the region’s main shipping routes, and is home to a fishing ground that provides livelihoods to thousands of people.

How many times the dispute has erupted in past and why?

  • In the recent decade, the worst skirmish has occurred b/w Vietnam and China. The Chinese captured the Paracels from Vietnam in 1974, and killed more than 70 Vietnamese troops. In 1988 both sides collided in the Spratlys, when Vietnam again bore the brunt of China, and lost about 60 sailors.
  • The Philippines has also been involved in a few minor scuffles with Chinese, Vietnamese and Malaysian forces.
  • The latest rise in tension has overlapped with powerful posturing from China. Chinese officials have sent out a number of strongly worded statements, and have warned their rivals to stop any mineral exploration in the area.
  • China has also been accused by the Philippines of establishing its military presence in the Spratlys. The two countries have involved in a maritime confrontation, accusing each other of invasions in the Scarborough Shoal. Chinese and Philippine vessels are not ready to leave the area, and tension has surged, leading to rhetoric and protests.

What interventions have been made to resolve the issue?

  • Over the years, China has remained inclined to arrangements negotiated behind closed doors with the individual leaders of other countries. But the other countries have called for international interventions.
  • US Secretary of State Hillary Clinton had called for a binding code of conduct. The suggestions were vehemently rejected by China.
  • Agreements such as the UN’s 1982 convention seemed to lay the framework for a solution. However, the convention resulted in more overlapping claims, and did nothing to dissuade China and Vietnam in pushing their historical claims.
  • Even the agreements signed among Philippines, Vietnam and China to put in place codes of conduct in the area made little difference.
  • ASEAN concluded a code of conduct deal with China in 2002.
  • Under the pact, the countries decided to resolve their territorial and jurisdictional disputes by peaceful means, without resorting to the threat or use of force, through friendly consultations and negotiations.
  • But current events show that Vietnam and China have failed to follow the spirit of that agreement. ASEAN still ponders over to bring new ideas for resolving the dispute.



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  • rajjadon

    sir if there is that much dispute then why vietnam is offering india ovl contract?
    evenafter it is not decided who will b the owner of these islands with which right veitnam is offering the contract?
    please clear my confusion