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By Charlie Zhu | HONG KONG | Wed Jun 20, 2012 10:35pm EDT | Reuters

China has spent nearly $1 billion on an ultra-deepwater rig that appears intended to explore
disputed areas of the South China Sea, one of Asia's most volatile hotspots and where the United
States is strengthening ties with Beijing's rival claimants.

For now, the locally built Haiyang Shiyou (Offshore Oil) 981 rig owned by China's state-run CNOOC
oil company is drilling south of Hong Kong in an area within Beijing's ambit.

But Chinese energy experts say Beijing will eventually move its first ultra-deepwater rig to explore in
deeper and more oil-rich waters further south in the South China Sea, where China, Vietnam, the
Philippines, Taiwan, Malaysia and Brunei have overlapping territorial claims.



The deepwater area of the South China Sea remains untapped, largely because tensions between rival
claimants have made oil companies and private rig-builders reluctant to explore contentious acreage
well away from sovereign coastlines.

CNOOC, or the China National Offshore Oil Corp, is an $89 billion company with oil and gas assets in
Indonesia, Iraq, Australia, Africa, North and South America, as well as China.

Read full article:- http://www.reuters.com/article/2012/...85K03Y20120621