BEIJING, Aug. 29 (UPI) -- State-owned China National Offshore Oil Corp. is offering 26 offshore blocks, 22 of which are in the South China Sea, for joint development with foreign companies.
The announcement, posted Tuesday on CNOOC's Web site, comes two months after the oil giant offered nine oil and gas blocks for foreign cooperation in the South China Sea in an area south of Hainan in waters that Vietnam considers part of its exclusive economic zone.
Oil reserves under the South China Sea are estimated at 23 billion-30 billion metric tons with natural gas reserves of 16 trillion cubic meters.
China maintains it has sovereignty over all the South China Sea, while Vietnam asserts competing claims over parts of the sea, including the Spratly Islands. The disputed waters are also claimed in whole or in part by the Philippines, Taiwan, Brunei and Malaysia.
The June offers, covering 61,824 square miles, sparked protests from Hanoi and state company PetroVietnam, further raising tensions over ongoing boundary disputes in the South China Sea.
Bai Bing, a senior analyst at Beijing Petroleum Exchange, said CNOOC's new offerings demonstrate the company's determination to increase its output.
"Strengthening its upstream, exploration and production will help ensure the supply in its downstream, sales and distribution businesses," he was quoted as saying by China Daily.
CNOOC's semiannual report indicates that production the first half of the year totaled 160.9 million barrels, down 4.6 percent year on year. The company aims to meet a production target of 330 million-340 million barrels of oil equivalent this year.
CNOOC on July 25 signed two production-sharing contracts with Royal Dutch Shell PLC to explore two offshore oil blocks in the South China Sea's Yinggehai basin, but state-run newspaper the Global Times quoted a Shell spokesman in China as saying that those blocks are close to Hainan Province and off the disputed area.
While the dispute in the South China Sea is a big deterrent to companies, the reserves are still attractive, says Kang Wu, a senior adviser on the China market at FACTS Global Energy, which assesses the demand for oil globally.
"You have so many small drillers which are risk-takers for all kinds of reasons," Wu was quoted as saying by Voice of America. "High risk also means high reward, potentially. So, in the end, it's every company's policy, their own sort of methodology of weighing the risk."