UPDATE 1-China confirms telling Exxon to end Vietnam oil deal

(Adds Exxon Mobil statement, background, paragraphs 7-8, 11-12)

BEIJING, July 22 (Reuters) - China said on Tuesday it had told Exxon Mobil Corp XOM.N to pull out of an oil exploration deal with Vietnam that it sees as a breach of Chinese sovereignty.

Hong Kong’s South China Morning Post reported the deal on Sunday, describing it as a preliminary cooperation agreement between Exxon Mobil and state oil firm PetroVietnam that covers exploration in the South China Sea.

“China’s position on the South China Sea is clear and consistent. On the specific case, we have stated our position to relevant parties,” Foreign Ministry spokesman Liu Jianchao told a regular news conference.

“China opposes any activities that infringe on our sovereignty and territorial integrity in the South China Sea.”

China and Vietnam have a number of festering disagreements over territory, including disputed sovereignty in the Spratly Islands, a string of rocky outcrops in the South China Sea that could contain oil and gas deposits.

The islands are also claimed by Taiwan, Brunei, Malaysia and the Philippines.

Exxon Mobil said in a statement it had not signed any exploration contracts in Vietnamese waters but that it was looking at offshore projects with PetroVietnam.

“ExxonMobil and PetroVietnam have been working together for several years to identify potential projects of mutual interest and are currently conducting preliminary joint technical and commercial evaluations of several offshore prospects,” it said.

The South China Morning Post cited Vietnamese Foreign Ministry spokesman Le Dung as saying that Hanoi’s dealings fell entirely within the country’s legal rights.

The newspaper also quoted sources as saying Exxon Mobil was confident of Vietnam’s sovereign rights to the blocks in question.

Vietnam and China, neighbours which fought a brief border war in 1979, have said they are committed to finding a peaceful solution to the Spratly Islands dispute and have agreed to cooperate in oil and gas exploration in the Gulf of Tonkin in the north.

But BP Plc BP.L halted plans to conduct exploration work off the southern Vietnamese coast last year, citing the territorial tensions.


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