US takes sterner action against Exxon’s Chinese partner here, unlikely to affect local operations

The Trump administration in its waning days took another swipe at China and its biggest firms yesterday including ExxonMobil’s Guyana partner, CNOOC for alleged misdeeds in the South China Sea.

According to Reuters, executives of state-owned enterprises, officials of the Chinese Communist Party and military, along with oil giant CNOOC will face new restrictions for allegedly using coercion against states with rival South China Sea claims.

Reuters said that senior U.S. officials told reporters on a call yesterday that the new CNOOC restrictions will not apply to crude, refined fuels and liquid natural gas and do not apply to existing joint ventures with CNOOC that do not operate in the South China Sea.

This would likely mean that CNOOC faces no pressure in its joint venture with ExxonMobil’s EEPGL and Hess in the Stabroek Block offshore Guyana.

In its response, Reuters said that the Chinese embassy in the US referred to Jan. 7 Foreign Ministry comments accusing Washington of “pinning political and ideological labels on economic and trade issues and exploiting its state power to crack down on foreign companies, under the pretext of national security.”

The United States has long opposed China’s extensive territorial claims in the South China Sea, a potentially resourcerich area that is also a strategic trade route. Washington accuses Beijing of intimidating states such as Vietnam and the Philippines that have competing claims there.

China accuses Washington of trying to destabilize the region by sending warships and planes to the South China Sea.

“The United States stands with Southeast Asian claimant states seeking to defend their sovereign rights and interests, consistent with international law,” Secretary of State Mike Pompeo said in announcing the sanctions, Reuters said.

Pompeo said Washington was imposing

visa restrictions on executives of Chinese state-owned enterprises and officials of the Chinese Communist Party and navy.

The Commerce Department accused CNOOC of harassing and threatening offshore oil and gas exploration and extraction in the South China Sea, “with the goal of driving up the political risk for interested foreign partners, including Vietnam”, Reuters reported.

Commerce Secretary Wilbur Ross said CNOOC acted as “a bully for the People’s Liberation Army to intimidate China’s neighbours” and the Chinese military “continues to benefit from government civil-military fusion policies for malign purposes.”

Ross’s department added CNOOC to an “Entity List” that requires firms to be granted a special license before they can receive exports of high-tech items from U.S. suppliers.

Last month, CNOOC was added to a U.S. blacklist of alleged Chinese military companies, forcing U.S. investors to shed their holdings in the company by November 2021, Reuters said.