China Warns ExxonMobil: Drop Deal With Vietnam -Report
Sunday July 20th, 2008 / 6h15
HONG KONG (AFP)--China has warned U.S. oil giant ExxonMobil Corp. (XOM) to drop an exploration deal in the seas off Vietnam and said the project could threaten any future mainland contracts, a Hong Kong newspaper reported Sunday. Diplomats in Washington have contacted senior figures in the world's largest oil firm to protest the deal, which they say could be a breach of Chinese sovereignty, the Sunday Morning Post reported citing unnamed sources close to the U.S. firm. "If it was simply a legal question it would be easy," one of the sources told the newspaper. "Vietnam would probably prevail in international mediation. But it's political, too. China's concerns make the situation much more complicated for a company like Exxon ... China is a very important player in the international oil industry." The dispute involves a preliminary co-operation agreement between state oil firm PetroVietnam and ExxonMobil covering exploration in the South China Sea off Vietnam's south and central coasts, the report said. The Chinese protests are based on Beijing's historical claim to huge swathes of the South China Sea, the report said. Last year, China criticized a joint deal between Vietnam and U.K. energy giant BP PLC (BP) near the disputed Spratly Islands in the South China Sea, saying the area has been an "indisputable part of Chinese territory since ancient times." The report quoted Vietnamese Foreign Ministry spokesman Le Dung saying it needed to be "clearly asserted" that Hanoi's dealings with foreign oil partners fell entirely within Vietnam's legal rights and sovereignty. China and Vietnam - who in 1979 fought a short border war after Vietnam expelled the Beijing-backed Khmer Rouge from Cambodia - also fought a brief naval battle in 1988 near the Spratly Islands. Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=x%2FvVwgEA2n3UklsRzptlOg%3D%3D. You can use this link on the day this article is published and the following day.
