Vietnam says China's oil rig movement into South China Sea is 'illegal'

HANOI (REUTERS) - Vietnam says China's plan to move its first deep-water drilling rig into the disputed South China Sea, one of Asia's most volatile hotspots, is illegal and has called for the rig to be removed from what it says is Vietnam's territorial waters.

The US$1 billion (S$1.25 million) offshore oil rig called Haiyang Shiyou 981 owned by the China's state-run CNOOC oil company has been drilling south of Hong Kong.

Maritime Safety Administration of China (MSAC) on Saturday published an announcement on its website saying it prohibits all marine vessels entering into a one mile radius of the Haiyang Shiyou 981's South China Sea drilling work.

Vietnam's Foreign Ministry spokesman on Sunday objected to the move, saying the oil rig coordinates were within Vietnam's exclusive economic zone and continental shelf, about 120 nautical miles off its coast.

"All activities of foreign countries in Vietnam's waters without Vietnam's permission are illegal and worthless, Vietnam resolutely opposed," spokesman Le Hai Binh said in a statement.

Vietnam's state Oil and Gas Group PetroVietnam sent a letter to CNOOC on Sunday saying it strongly objected to China's action and "insisted CNOOC stop immediately the illegal activities and pull out Haiyang Shiyou 981 of Vietnam's waters".

Despite Hanoi's objection, MSAC on Monday expanded the prohibited area around its oil rig to a three miles radius.

CNOOC, China's top offshore oil producer, in 2012 invited foreign companies to jointly develop nine blocks in the western part of the South China Sea, a move Vietnam said was illegal because the blocks overlap its territorial waters.

China and the 10 countries of the Association of South East Asian Nations, which will hold an Asean summit in Myanmar on May 10-11, are trying to negotiating a code of conduct to ease tensions in the South China Sea.