Jakarta, CNBC Indonesia – United States (US) imposed sanctions on China’s third largest oil company, China National Offshore Oil Corp (CNOOC) for drilling in the South China Sea (LCS) region.
Apart from CNOOC, a US blacklist was also provided to between four companies owned or controlled by the Chinese military, it was reported Reuters.
Even so, CNOOC has not received any notification or official decision from any US government agency, said the unit of the company which is listed on the stock exchange in Hong Kong.
“The company continues to monitor the development of the situation,” he was quoted as saying on Tuesday (12/1/2020).
CNOOC is the smallest of the top three state-owned oil companies after China National Petroleum Corp. (CNPC) and China Petrochemical Corp. (Sinopec).
The CNOOC operation in the SCS has caused controversy as China claims drilling rights in waters far from its borders, and within 200 miles of other countries, such as Vietnam and the Philippines.
“My guess is that CNOOC was targeted, and not CNPC or Sinopec, because of its drilling in the South China Sea area, which the US considers a military action,” said Lin Boqiang, dean of the China Institute of Energy Policy Research at Xiamen University in southern China, quoted from Bloomberg.
US investors hold a 16.5% stake in the CNOOC unit listed in Hong Kong on Friday (27/11/2020), creating the potential for large outflows if they are forced to divest, according to Henik Fung, an analyst at Bloomberg Intelligence.
President Donald Trump signed an order prohibiting American investment in Chinese companies owned or controlled by the military. So that the Cnooc Ltd unit fell 14% on Monday (30/11/2020).
On the other hand, CNOOC also owns US oil and gas fields, partnering with companies such as Exxon Mobil Corp. in international projects, and using American technology and equipment.
Sengyick Tee, an analyst at SIA Energy in Beijing said any disruption along that path would have a “huge impact” on the company.
CNOOC has been at the center of a territorial dispute in the LCS since 2012, when it invited foreign drillers to explore Vietnam’s off-grid blocs that Hanoi’s leaders had given to companies including Exxon Mobil and OAO Gazprom.
In 2014, the countries accused each other of having been hit by each other’s ships, including in the vicinity of the CNOOC oil rig near the Paracel Islands.
The Philippines resumed oil exploration in the SCS for the first time since 2015 in October, when the country filed a case with the Permanent Arbitration Court over the disputed waters.
The resumption occurred after Manila and Beijing reached an agreement on a framework for joint exploration. Philippine company PXP Energy Corp. said it was in talks with CNOOC for a partnership.
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