Despite Chinese unease about India’s growing energy ties with Vietnam, New Delhi is set to pump in $145.94 million in a gas field in the politically sensitive region.
Though this particular investment is not in an area where the Chinese have a territorial dispute with Vietnam, the Indian move does have strategic implications. The Union cabinet will consider this proposal on Thursday.
The Indian investment is aimed at raising the stake of ONGC’s foreign arm OVL in the joint venture for gas field 06.1 in Nam Con Son basin off Vietnam’s south coast. Currently, OVL owns 45% stake while BP (British Petroleum) has 35% and PetroVietnam owns the remaining 20% share.
With BP exiting from the venture to raise money to offset the loss incurred in the Gulf of Mexico oil spill, OVL is eyeing the controlling stake in the venture. In fact, New Delhi had already used its diplomatic clout with Vietnam to ensure that OVL gets the chance to buy BP’s shares. Under Chinese pressure, Vietnam is keen to have as many foreign companies as possible in its energy sector, most of which are in the contested South China Sea.
Apart from two offshore gas fields, the venture also runs a pipeline and a power project.
In the past, China had raised serious objections to OVL’s participation in oil blocks 127 and 128 in South China Sea off Vietnam coast. While China claimed sovereignty in these areas, Vietnam cited its sovereignty rights over Blocks 127 and 128 according to the United Nations Convention on the Law of the Sea, 1982.
“This particular gas block is not in a disputed area. We have been there for a while and this project is giving us good returns as well. It makes immense business sense to stay there and no political reasons are attached to the move,” an official, familiar with the development, said.
There are many potentially oil and gas-rich islands on the South China Sea, which are facing territorial disputes.