The $1bn deepwater rig, known as the Haiyang Shiyou 981, is owned by China National Offshore Oil

China drills first deep-water well off coast of Vietnam

An oil rig has completed the controversial drilling of China's first deep-water well not far from Vietnam's coast, the official Xinhua News Agency said.

The $1bn (£634m) deep-water rig, known as the Haiyang Shiyou 981, is owned by state-run China National Offshore Oil Corp (CNOOC), China's largest producer of offshore oil and gas. Xinhua cited a company statement saying the rig had completed China's first high-temperature, high-pressure and deep-water exploration well.

The rig's deployment last year in what Vietnam considers its exclusive economic zone - approximately 120 nautical miles off its coast - led to a major breakdown in relations between the two countries.

China's Maritime Safety Administration website had previously put the drilling site just over 100 nautical miles from the coast of Vietnam and 75 nautical miles south of the resort city of Sanya on China's Hainan Island, although Xinhua did not give an exact location.

The two countries agreed on an equal split of their maritime boundary of the Gulf of Tonkin in 2000, but have yet to agree on demarcating waters further south, near the well's site.

China claims most of the potentially energy-rich South China Sea, but the Philippines, Vietnam, Malaysia, Brunei and Taiwan also have overlapping claims.

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