China threat hangs over Vietnam exit for OVL

Vol 15, PW 20 (19 Apr 12) People & Policy

China believes the South China Sea is its ‘backyard’.

But India says it has every right to be there. And poor OVL is caught in the middle holding a dud exploration block! OVL wants to relinquish 7058-sq km offshore Vietnam block B128 because problems anchoring a rig on the hard seabed prevent it from drilling a well.

But bizarrely, its political masters in Delhi want OVL to stay to prevent the impression India is bowing to Chinese pressure and leaving, tail between its legs. “OVL’s decision to initiate the relinquishment process is based purely on ‘techno-commercial’ considerations,” writes oil ministry undersecretary A.

Ushabala on April 10, to foreign ministry joint secretary Prabhat Kumar. “But as the project has received prominent media coverage and has engendered questions in parliament, we refer the matter to the Ministry of External Affairs for advice.

” This is the first time the oil ministry has sought foreign ministry advice before relinquishing an overseas block, say observers. “Normally OVL just completes surrender formalities and quits,” we learn.

“The oil ministry doesn’t come into the picture at all.” China is warning India to stop exploration in the South China Sea but India says the block belongs to Vietnam under UN law.

“This is bad timing,” adds a foreign ministry official. “If OVL relinquishes the block it will send out the wrong message that we’re backing out from Vietnam.

” Yet OVL is adamant the block isn’t worth it and that it should be allowed to leave. On March 22, OVL director (exploration) NK Verma said as much to oil ministry joint secretary (exploration) Aramane Giridhar.

“An attempt to drill a well ‘in sequel’ was unsuccessful due to severe logistical constraints in anchoring the rig,” writes Verma, “significantly increasing the well-cost and element of risk.”