India, Vietnam sign deal to deepen energy cooperation

India, Vietnam sign deal to deepen energy cooperation

New Delhi: Ignoring Chinese objections to India-Vietnamese energy cooperation in the disputed South China Sea, India and Vietnam on Wednesday signed a pact to expand their partnership in oil and gas exploration, refining, transportation and supply.

The pact was one of the six signed in the presence of Prime Minister Manmohan Singh and visiting Vietnamese President Truong Tan Sang in New Delhi.

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The agreement says the two nations will cooperate on “various fronts in the oil and gas sector—in upstream activities, in refining, in gas processing in Vietnam, in India and in third countries," said D.K. Sarraf, managing director of the Indian government-run ONGC Videsh Ltd (OVL), who signed the pact with his counterpart in PetroVietnamPhung Dinh Thuc.

India is also looking to bid for more oil and gas blocks off the coast of Vietnam, which plans to seek bids for nine blocks.

“Our team has already evaluated the data and will take a decision before the last date for submitting bids, which is January 26, 2012," Sarraf said.

The decision by India and Vietnam to deepen cooperation in the energy sector comes on the heels of China exerting “indisputable sovereignty" over the South China Sea, which lies to the east of Vietnam, and asking countries in the region to refrain from oil exploration in its waters.

China and Vietnam are among the many countries that hold competing claims over the South China Sea and the islands in its waters. In June, tension flared between China and Vietnam over the Spratly and Paracel Islands, following clashes between Chinese and Vietnamese boats.

“China enjoys indisputable sovereignty over the South China Sea... China’s stand is based on historical facts and international law," Chinese foreign ministry spokesperson Jiang Yu told reporters in Beijing last month.

“China is ready to engage in peaceful negotiations and friendly consultations to peacefully solve the disputes... We hope the relevant countries respect China’s position," she said.

China and India, the world’s fastest growing major economies, are competing for energy resources in various regions to fuel their growth.

On Wednesday, Vietnamese President Sang said he and Singh had discussed the dispute.

“We agreed that all disputes in the Eastern Sea (South China Sea) should be settled through peaceful negotiations on the basis of respect for international laws, including the (1982) United Nations Convention on the Law of the Seas," he said.

Singh described India and Vietnam as maritime neighbours facing common security challenges from terrorism, piracy and natural disasters.

“We believe that it is important to ensure the safety and security of the vital sea lanes of communication. We have agreed to continue and strengthen our exchanges in these fields," Singh said. “A strong India-Vietnam partnership is a factor of peace, stability and development in the Asia-Pacific region. It is a partnership that stands on its own merits."

Both leaders agreed to increase bilateral trade to $7 billion by 2015 from the current $2.7 billion. Sang identified investment, finance, science and technology and defence and security as areas for deepening cooperation.

He sought new credit lines to increase trade and promised to create a favourable business climate for Indian enterprises in Vietnam.