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Exclusive: Vietnam unit of Russia's Rosneft fears Beijing backlash over South China Sea drilling

Reuters  |  HANOI 

By James Pearson

(Reuters) - Rosneft BV, a unit of Russian firm Rosneft, is concerned that its recent drilling in an area of the Sea that is claimed by could upset Beijing, two sources with direct knowledge of the situation told on Wednesday.

Rosneft said on Tuesday its Vietnamese unit had started drilling at the LD-3P well, part of the Do "Red Orchid" in Block 06.1, 370 kms (230 miles) southeast of

The block is "within the area outlined by China's nine-dash line," according to consultancy and research firm

China's U-shaped "nine-dash line" marks a vast expanses of the Sea that it claims, including large swathes of Vietnam's Exclusive Economic Zone. Maps of the area indicate the block is around 85 kms (53 miles) inside the contested area.

A series of dashes, the line is not continuous making China's claims often ambiguous. In recent years, though, China has increasingly patrolled and enforced the area, claiming historic rights to the resources and features within it.

In March, halted an in the nearby "Red Emperor" block following pressure from China, sources told

That block is licensed to Spanish firm Repsol, which has asked Vietnam to pay compensation over the issue.

The Vietnamese foreign ministry did not respond to a request from for comment.

China's foreign ministry did not respond to a faxed request for comment late on Wednesday.

Russia's foreign ministry did not respond to a request for comment. Rosneft declined to comment.

Fearing repercussions and pressure from China, Rosneft Vietnam had wanted to begin drilling with as little attention as possible, despite the statement by its parent company on Tuesday, the sources said.

WARNED OVER PRODUCTION

The drilling in the "Red Orchid" within the block will be undertaken using the "Hakuryu-5" equipment made by Japanese company Japan Drilling Co., Ltd , Rosneft said in that statement.

The Hakuryu-5 arrived in the disputed area on May 6, according to Eikon ship tracking data and was still recorded as being inside the block late on Wednesday.

The drilling is significant for Vietnam, which has been struggling to maintain its crude amid already declining production from its key fields and the continuing pressure from China in the disputed waters.

In April, Vietnam's firm said that maritime tensions with China will hurt its offshore exploration and production activities this year.

and have long been embroiled in disputes over the maritime boundary, which is a politically sensitive issue in Vietnam.

Police in the central province of have launched an investigation into a group of Chinese tourists who were pictured in a local airport wearing T-shirts printed with a map showing the "nine-dash line", reported on Wednesday.

Airport authorities asked the tourists, who arrived at on Sunday, to take off their T-shirts after going through customs, the Van Hoa (Culture) newspaper reported.

(Additional reporting by Khanh Vu; Editing by Martin Howell)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, May 17 2018. 08:48 IST
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