U.S. Adds Chinese Oil Giant CNOOC to Blacklist

By David Shepardson, Alexandra Alper and David Brunnstrom

WASHINGTON, Jan 14 (Reuters) – The United States announced sanctions on Chinese state-owned enterprise and military officials on Thursday and added Chinese oil giant CNOOC to a blacklist, accusing them using coercion against states with rival claims in the South China Sea.

The moves by the Trump administration will further increase tensions with China, Washington’s strategic rival in Asia, days before President-elect Joe Biden takes office on Jan. 20.

The United States has long opposed China’s extensive territorial claims on the South China Sea, a potentially resource-rich area that is also a strategic trade route. Washington accuses Beijing of seeking to intimidate other Southeast Asian coastal states such as Vietnam and the Philippines that have competing claims there.

China says Washington has sought to stir up controversy over maritime sovereignty claims and tried 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.

“We will continue to act until we see Beijing cease its coercive behavior in the South China Sea.”

A statement from Pompeo said the United States was imposing visa restrictions on Chinese individuals, including executives of state-owned enterprises and officials of the Chinese Communist Party and navy.

He said the sanctions were directed against those “responsible for, or complicit in, either the large-scale reclamation, construction, or militarization of disputed outposts in the South China Sea, or (China’s) use of coercion against Southeast Asian claimants to inhibit their access to offshore resources in the South China Sea.”

The restrictions could also apply to immediate family members, he said.

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.”

The 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.

The department also said it was adding Chinese aviation firm Skyrizon to a Military End-User (MEU) List over its ability to develop military products including aircraft engines, restricting its access to U.S. exports.

The Trump administration added nine other Chinese firms to that blacklist of alleged Chinese military companies, including planemaker Comac and mobile phone maker Xiaomi , according to a document seen by Reuters.

CNOOC was added last month to that list, which forces American investors to divest their holdings of in them by Nov. 11, 2021.

Pompeo said China had used CNOOC and other state enterprises as weapons to attempt to enforce Beijing’s “unlawful ‘Nine Dashed Line'” claim in the South Chine Sea. He said CNOOC had deployed a mammoth survey rig off the Paracel islands in 2014 in an attempt to intimidate Vietnam.

The Chinese embassy, CNOOC and a legal representative of Skyrizon did not immediately respond to requests for comment.

CNOOC ‘ACTS AS A BULLY’

President Donald Trump’s administration has pursued a tough line on China and has kept up pressure in its final days, targeting what Washington sees as Beijing’s bid to use corporations as a means to harness civilian technologies for military purposes.

Commerce Secretary Wilbur Ross said China’s “reckless and belligerent actions in the South China Sea” were a threat to the security of the United States and of the international community.

“CNOOC acts a bully for the People’s Liberation Army to intimidate China’s neighbors, and the Chinese military continues to benefit from government civil-military fusion policies for malign purposes,” Ross said in a statement.

(Reporting by David Shepardson, Alexandra Alper, Lisa Lambert, David Brunnstrom and Mike Stone in Washington; Additional Reporting by Brenda Goh in Beijing; Editing by Frances Kerry and Nick Macfie)

(c) Copyright Thomson Reuters 2021.