Chinese drilling rig off Vietnam likely to strike gas, experts say

A Chinese oil rig, the deployment of which in 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, one that is likely to be 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.

The US$1 billion deepwater rig owned by state-run China National Offshore Oil Company Group, parent of listed flagship unit CNOOC, 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 government think-tank in Hainan province.

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.