August 2008

China warns Exxon on Vietnam deal

Exxon Mobil Corporation's annual revenues are more than most countries on Earth. China, however, might not be as considerate of the company's interests as many smaller nations.

The Chinese government has warned Exxon Mobil to pull out of an exploration deal with Vietnam, describing the project as a breach of Chinese sovereignty.

Reuters reported Chinese diplomats in Washington had made repeated verbal protests to Exxon Mobil executives in recent months and warned them its future business interests on the mainland could be at risk. The protests involve a preliminary co-operation agreement between state oil firm PetroVietnam and Exxon Mobil covering exploration in the South China Sea off Vietnam's south and central coasts.

China and Vietnam have a number of festering disagreements about territory. The two countries dispute sovereignty over the Spratly Islands, a string of rocky outcrops in the South China Sea suspected of containing large oil and gas deposits and also claimed by Taiwan, Brunei, Malaysia, and the Philippines.

Exxon Mobil is confident of Vietnam's sovereign rights to the blocks it was exploring, but it could not dismiss China's warnings out of hand.