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India pulls out of South China Sea exploration

15th May 2012

Indian has decided to cease operations in the South China Sea because it believes it is not commercially viable enough

Beijing believes India's intentions to explore the South China Sea are based on sovereignity and not business

India is likely to withdraw from an oil block in the South China Sea after no hydrocarbons were found in an exploratory well, according to reports.

Officials have conveyed to Vietnam plans to terminate operations based "on commercial considerations", Indian media reported. 

In 2006, Vietnam assigned oil block No 127 and No 128 to an Indian oil gas company named ONGC Videsh Ltd, the global arm of the state-owned Oil and Natural Gas Corp. 

Despite objections from the Chinese government, the company began production tests in September 2009. 

India also left oil block No 127 in 2011 after oil did not show up in an exploratory well. 

On Saturday, Indian media said that ONGC had written the oil ministry, expressing its intent to relinquish the block, and sought the opinion of the foreign ministry on the issue. 

The ministry said in a letter to the MEA that OVL's decision to relinquish the block is "based purely on techno-commercial considerations". 

Though New Delhi maintained that its exploration activities in the South China Sea were purely commercial, Beijing has said it was an issue of sovereignty. 

Sun Weidong, deputy director of the department of Asian affairs with Chinese Foreign Ministry Asian Affairs, said the region is a disputed territory and it does not benefit India to carry out explorations in the area.