NEW DELHI—India and Vietnam on Wednesday signed an accord to promote oil exploration in Vietnamese waters, despite Hanoi’s long-standing dispute with China over sovereignty of islands in the West Philippine Sea (South China Sea).
The agreement was signed in New Delhi after talks between Prime Minister Manmohan Singh and Vietnamese President Truong Tan Sang.
The accord between India’s state-owned Oil and Natural Gas Corp.’s foreign arm, OVL, and Vietnam’s PetroVietnam included new investments and the exploration and supply of oil and gas to the two countries.
China has grown more assertive in pressing its claims to much of the West Philippine Sea, aided by a buildup of its navy. New Delhi has downplayed China’s recent objections to the Indian company exploring for oil in Vietnamese waters.
Vietnam’s fast-growing economy, and its natural resources including oil and gas, are an attraction for India, which is seeking energy sources to fuel its economic boom.
But China views India’s forays into Vietnamese waters with suspicion. China claims the disputed Paracel and Spratly island groups and the waters around them and in recent years Chinese ships have rousted fishing vessels from Vietnam and the Philippines, both of which contest China’s claims.
In July, an Indian warship was cautioned by China when it was about 45 nautical miles off the Vietnamese coast after visiting Vietnam.
Last month, China objected to OVL exploring for oil and gas in Vietnam’s territorial waters.
India played down the two incidents by saying no confrontation was involved, but it stressed its support for the freedom of navigation in international waters — including the West Philippine Sea.
Vietnam, one of the fastest growing economies in Asia, has in recent years attracted sizable investments from Indian companies, a trend that the two countries want to encourage.
Singh said India was committed to greater investment flows between the two countries.
“Several Indian companies are working in Vietnam, and we similarly welcome Vietnamese investments in India,” he said.
The two countries also agreed to cooperate in ensuring the safety and security of sea lanes in the region.
Singh said the two “maritime neighbors” faced the common security challenges of terrorism, piracy and natural disasters and agreed to work closely to tackle the threats posed by them.
Sang said the two countries had set a bilateral trade target of $15 billion by the year 2015. Trade between the two countries was $2.7 billion last year.