If China does retaliate against ExxonMobil, it may prohibit any business dealings with it similar to its ban on business transactions of any kind with American arms suppliers to Taiwan. Today, the Bureau of Industry & Security (BIS) added China National Offshore Oil Corporation Ltd. (CNOOC) to the U.S. China National Offshore Oil Corporation, or CNOOC Group (Chinese: 中国海洋石油总公司 Pinyin: Zhōngguó Háiyáng Shíyóu Zǒnggōngsī), is one of the largest national oil companies in China. The move comes as the Trump administration plans several new hard-line moves against Beijing in the final weeks of its term. The sanctions may hurt its stock value and could severely damage the company’s reputation. Learn more about how we use cookies in our cookie policy. Fun with China: Sanctions Against the China National Offshore Oil Corporation. CNOOC said that it was “shocked and regretful,” that the action was based on “false and inaccurate” information, and that it is now “comprehensively assessing the impact of the situation on the group.”. Indeed, to survive in the long term CNOOC may have to split up or terminate some of its businesses. China National Offshore Oil Corporation (CNOOC), which has positioned a massive drilling rig in disputed waters also claimed by Vietnam. Vietnam claimed the rig was operating in its exclusive economic zone (EEZ), while China maintained that it was operating in its waters. The company is China National Offshore Oil Corporation (CNOOC), a major Chinese oil driller working in the South China sea. Any disruption along those lines would have a “huge impact” on the company, said Sengyick Tee, an analyst at SIA Energy in Beijing. But the apparent reason for sanctioning CNOOC under this order is its involvement in China’s unilateral exploration and drilling in disputed areas of the South China Sea. It argues among others that Vietnam recognized its claim in a 1958 letter from Vietnam’s premier at the time, Pham Van Dong, to China’s then-premier Zhou Enlai. A visitor looks at China National Offshore Oil Corporation's oil refinery in Huizhou in southern Guangdong province. All material subject to strictly enforced copyright laws Please read our Terms & Conditions, Cookies Policy and Privacy Policy before using the site. It also uses American technology and equipment. But the US seems to be implicitly taking Vietnam’s side in its various relevant disputes with China including this one. The state-linked oil explorer faces possible new US sanctions. But there is the much bigger potential problem of retaliation by China. FILE PHOTO: Logos of China National Offshore Oil Corporation (CNOOC) are displayed at a news conference on the company's interim results in Hong Kong, China, March 23, 2017. This move by President Donald Trump’s administration during his lame-duck period will make it more difficult for President-elect Joe Biden to revive relations with Beijing. (AP) The US government on Thursday slapped more sanctions on Chinese firms and military officials over Beijing’s actions in the South China Sea. Indeed, whether he does so or not may be a good litmus test of his administration’s approach to China. In 2014, the countries traded accusations that each other’s boats had rammed vessels, including around a CNOOC oil rig near the Paracel Islands. The decision will take effect on March 9, the US stock exchange said in a statement released after the closing bell on Friday. In the latest of a series of measures targeting China before this week’s transition of administrations, on January 14, 2021, the Trump Administration added China National Offshore Oil Corporation Ltd. ( CNOOC) to the US Commerce Department Entity List, imposing comprehensive export control licensing requirement … The CNOOC Group focuses on the exploitation, exploration and development of crude oiland natural gas in offshore China, along with its subsidiary CO… China National Offshore Oil Corporation (CNOOC) is among the companies and individuals being sanctioned by the US for alleged misdeeds in the South China … China may conclude that the US has lured it into the global capitalist system and is now using it to punish and manipulate it. “The company is closely monitoring the development of the situation,” it said. January 19, 2021. US targets China’s National Offshore Oil Corporation with export sanctions. The unit, Cnooc Ltd., fell 14% on Monday. Also CNOOC may take certain measures to mitigate the risk. Awards | Rankings; January. CNOOC has been at the center of territorial disputes in the South China Sea since 2012, when it invited foreign drillers to explore blocks off Vietnam that Hanoi’s leaders had already awarded to companies including Exxon Mobil and OAO Gazprom. It is not clear why CNOOC was targeted. End of dialog window. Semiconductor Manufacturing International Corporation (SMIC) China National Offshore Oil Corp. (CNOOC) China Construction Technology Co. (CCTC) China International Engineering Consulting Corp. (CIECC) S&P Dow Jones Indices said late on Wednesday it will remove oil giant China National Offshore Oil Corp's (CNOOC) securities due to U.S. sanctions. One subsidiary, CNOOC Limited, is listed on the Hong Kong, New York and Toronto Stock Exchanges; another, China Oilfield Services, is listed on the Hong Kong and New York Stock Exchanges. President Donald Trump signed an order this month barring American investments in Chinese firms owned or controlled by the military. “My guess is it’s CNOOC that got targeted, and not CNPC or Sinopec, because of its drilling in the South China Sea area, which is deemed as so-called military actions by the U.S.,” said Lin Boqiang, dean of the China Energy Policy Research Institute at Xiamen University in southern China. David Stilwell, assistant secretary of state for East Asian and Pacific Affairs, was speaking after the Trump administration on Monday declared most of China’s … In addition, the Department of Commerce added the China National Offshore Oil Corporation (CNOOC) to its Entity List, which restricts exports to businesses abroad due to their “activities contrary to the national security or foreign policy interests of the United States,” effectively killing any ability for American businesses to trade or interact with them. Under the new rule, U.S. and non-U.S. exporters are generally prohibited from transferring items subject to the U.S. The U.S. government has sanctioned China’s third largest oil company and largest offshore petroleum producer China National Offshore Oil Corporation (CNOOC). The 5th Golden Hong Kong Stocks Awards - Best Energy & Resources Companies, Best CEO, Best CFO. Covering geo-political news and current affairs across Asia. Indeed, it is now building a US$10 billion petrochemical complex in China. Export Administration Regulations (EAR) to CNOOC without first obtaining a U.S. export … Any transactions with a U.S. nexus run the risk for breaching the sanctions. One analytical company downgraded CNOOC stock citing the risks of a ban on US owned stock or possibly a prohibition on any connections with US businesses. As of end-November US investors held about 16.5% of CNOOC’s shares. U.S. investors held 16.5% of the shares in CNOOC’s Hong Kong-listed unit as of Friday, creating potential for major outflows if they’re forced to divest, according to Henik Fung, an analyst with Bloomberg Intelligence. In connection with the … Until a ruling or a boundary is forthcoming, this area is disputed, and according to the Guyana-Suriname precedent, neither country should unilaterally proceed with exploitation. CNOOC Group focuses on the exploitation, exploration and development of oil and gas offshore China, along with its subsidiary COOEC (China Offshore Oil Engineering Company). Both have reasonable claims to the area in dispute. FILE - An oil platform operated by China National Offshore Oil Corporation (CNOOC) is seen in the sea off China's southernmost Hainan province, March 23, 2018. The company may have taken pre-emptive steps to protect itself in October, when it amended its its non-compete clause to allow the listed unit to transfer assets to its parent, Daiwa Capital Markets analysts including Leo Ho said in a note. According to the US State Department, Vietnam uses a baseline for its EEZ and continental-shelf claims in the disputed area that does not conform to UNCLOS (United Nations Convention for the Law of the Sea) stipulations. China National Offshore Oil Corp., the nation’s main deepwater explorer, is among four companies to be added to a list of firms owned or controlled by the Chinese military, Reuters reported. By Robert Slack & Julia Kuelzow on January 14, 2021. This includes projects in the Gulf of Mexico and Guyana, where it has a joint venture with ExxonMobil. Worse, it could stimulate a rethink in China regarding its economic interdependence with the US. Posted in Export Controls and Sanctions. CNOOC also owns U.S. oil and gas fields, partners with companies like Exxon Mobil Corp. on international projects, and uses American technology and equipment. 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The move could allow it to avoid political risk if the blacklist escalates into sanctions, the analysts said. Advertisement. However, China itself is subject to such strategies, which the Trump administration has been using with some effect. What if China retaliates by sanctioning ExxonMobil for undertaking exploration and drilling in areas it claims, such as in Vietnam Blocks 118 and 119? If so, these escalating sanctions would be a pyrrhic victory for the US. Philippine firm PXP Energy Corp. has said it’s in talks with CNOOC for such a partnership. The company is owned by the Chinese government. The Executive Order prohibits US individuals and companies from transacting publicly traded securities of “ Communist China Military Companies ”—companies that are in some way affiliated with the People’s Liberation Army. But there may be blowback. Will it be an improvement or more of the same? Indeed, China may come to regret the day it adopted “capitalism with Chinese characteristics” and act accordingly. In May 2014, CNOOC Ltd moved a CNOOC Group-owned drilling rig, Haiyang Shiyou 981, into the area and drilled just east of Vietnam’s Block 119. CNOOC is the smallest of China’s so-called big three state-owned oil majors after China National Petroleum Corp. and China Petrochemical Corp., also known as Sinopec. Corporate Videos: Recognitions. President-elect Joe Biden, who takes office on 20 January 2021, has also indicated that he will take a tough line against China. But Biden could reverse this particular executive order before too much damage is done. CNOOC’s foreign operations account for about one-third of its total production. CNOOC owns some US oil and gas fields and partners with companies such as ExxonMobil Corp on some overseas projects. So the sanctions or the fear of their expansion will have some US domestic effect. CNOOC hasn’t yet received any official notice or decision from any relevant U.S. government agency, the firm’s listed unit said in an exchange filing in Hong Kong. That means ExxonMobil’s drilling in these contracts let by Vietnam would be just as legally questionable as that of CNOOC’s drilling there. Its holdings range from gas marketing to petrochemicals. The United States may level sanctions against Chinese state-owned enterprises that are involved in land reclamation, dredging, and illegal oil exploration in the South China Sea, a senior U.S. diplomat said Tuesday. Valencia has published some 15 books and more than 100 peer-reviewed journal articles. China National Offshore Oil and Gas Company (CNOOC), the biggest Chinese offshore producer with operations both in China and abroad, will see an impact on its oil and gas shipping business, due to the U.S. sanctions on several Chinese tanker owning firms, a senior CNOOC executive said on Thursday." Mark J Valencia is an internationally recognized maritime policy analyst, political commentator and consultant focused on Asia. The US has warned China not to exert its military presence in the contested waters. January. FILE PHOTO: Logos of China National Offshore Oil Corporation (CNOOC) are displayed at a news conference on … Although the proposed prohibition on US investors owning securities in the company would not begin until November next year, the news was followed immediately by a decline of CNOOC Ltd’s stock by 14%. Sometimes, strategy includes economic "warfare," as China well knows from its actions againts those countries that dare to criticize it - like Australia. CNOOC’s operations in the South China Sea have run into controversy because China claims drilling rights in waters far from its borders, and within 200 miles of countries like Vietnam and the Philippines. The administration also said it was adding China’s state oil company, the China National Offshore Oil Corporation, to a list of companies with which U.S. citizens are banned from doing business. China National Offshore Oil Corp., the nation’s main deepwater explorer, is among four companies to be added to a list of firms owned or controlled by the Chinese military, Reuters reported. China claims the Paracels and has occupied them since 1974. Interpretative guidance may be forthcoming. OPINION: This month's decision by outgoing US President Donald Trump to add China National Offshore Oil Corporation (CNOOC) to a blacklist … The resumption came after Manila and Beijing reached a framework agreement for joint exploration. (Bloomberg) --China’s third-biggest oil company faces a U.S. blacklist, which could spur major outflows from its Hong Kong-listed unit, after years of involvement in offshore drilling in disputed South China Sea waters. At the center of the wide-ranging sanctions was China’s state-owned oil company, the China National Offshore Oil Corporation (CNOOC), which was added to a US … https://asiatimes.com/2020/12/us-sanctions-on-chinas-cnooc-may-backfire More by Mark Valencia. This site, like many others, uses small files called cookies to help us improve and customize your experience. Most recently he was a visiting senior scholar at China’s National Institute for South China Sea Studies and continues to be an adjunct senior scholar with the Institute. ExxonMobil has also undertaken drilling in areas claimed by both Vietnam and China. 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In 2008, Beijing warned it against proceeding there, suggesting that its business in China could be at risk. In the latest of a series of measures targeting China before last week’s transition of administrations, on January 14, 2021, the Trump Administration added China National Offshore Oil Corporation Ltd. (CNOOC) to the US Commerce Department Entity List, imposing comprehensive export control licensing requirement on exports of US goods, technology, and software to CNOOC. The executive order prohibits US individuals and companies from transacting publicly traded securities of “Communist China military companies” – companies that are in some way affiliated with the People’s Liberation Army. Business The United States announced sanctions on Chinese state-owned enterprise and military officials on Thursday and added Chinese oil giant CNOOC to a blacklist, accusing them using coercion against states with rival claims in the South China Sea. ExxonMobil is America’s third-largest company and is heavily invested in China. Apparently this order will force these investors to divest. But the executive order may not initially be too serious a blow to CNOOC because it is so far limited to divestment (joint-venture investments are apparently not prohibited), American holdings are relatively small, and there is uncertainty as to whether it will be continued by the incoming Joe Biden administration. The Philippines in October resumed oil exploration in the South China Sea for the first time since 2015, when the nation filed a case with the Permanent Court of Arbitration over the disputed waters. China has threatened retaliation against ExxonMobil before for doing what the US now alleges CNOOC is doing. As with all U.S. sanctions placed on Hong Kong and China thus far, the breadth and potential implications of the sanctions are wide. Entity List. Again in 2011, soon after ExxonMobil announced a discovery in Vietnam’s Block 118, China warned “foreign energy companies” against exploring in disputed areas. In the latest of a series of measures targeting China before last week’s transition of administrations, on January 14, 2021, the Trump Administration added China National Offshore Oil Corporation Ltd. (CNOOC) to the US Commerce Department Entity List, imposing comprehensive export control licensing requirement on exports of US goods, technology, and software to CNOOC. As a listed company, CNOOC Limited has been consistently pursuing sustainable development. If this is the reason, the US is using a rather loose and expansive definition of companies that are “affiliated” with China’s military.