By Stephen Robson
An agreement by China with the US-based Crestone Energy Company to explore some 25,000 square kilometres of seabed around the Spratly Islands has intensified the dispute over ownership of the archipelago.
China passed a maritime law in February which includes its claims over all the islands in the South China Sea.
Vietnam has called on China to suspend the contract and negotiate over what it calls the Truong Sai islands, and to stick to a November 1991 agreement to solve peacefully any disputes between the two countries.
The Chinese ambassador to Hanoi was called in and a formal protest lodged.
Located midway between Borneo and the Vietnamese coast, the archipelago straddles a strategic sea route linking the Pacific to the Indian Ocean and is believed rich in oil and gas. The island chain was under French colonial rule until the mid-1950s.
Vietnam has troops on 21 of the 105 islands, shoals and reefs. China has a military presence on six, the Philippines on eight, Malaysia on three and Taiwan on one. Vietnam and the Philippines have airstrips on the islands.
China claims the whole archipelago, which it calls the Nansha Islands.
Malaysia staked its claim to atolls on the Spratly chain in 1979 and occupied Terumbu Layang Layang atoll in 1983. Kuala Lumpur was the first to develop part of the group for tourism, building a resort on Terembu atoll although its commercial launch has been delayed until the territorial dispute is settled.
A 1958 Philippine law declared the Spratly Islands part of Philippine territory, naming them Kalayaan. Manila lays claim to 53 islands, shoals and reefs near the Philippine province of Palawan.
Taiwan claims the islands as part of its claim of sovereignty over all China. It maintains support facilities for visiting Taiwanese fishing boats on Taiping Island in the centre of the group.
Brunei claims the Louisa Reef in the south-western end of the chain of islands and protested, via the British government, against the 1979 claim by Malaysia.
Vietnam was involved in a brief naval battle with China over the islands in 1988. Three Vietnamese naval supply vessels were sunk, with 72 people killed.
A third meeting on the issue in recent years was held in the Indonesia he end of June, attended by all claimants plus Indonesia, Singapore, Laos and Thailand.
As the conference was proceeding, a Chinese Foreign Ministry spokesperson in Beijing stated, "The legal rights and interests of foreign investors conducting business on Chinese territory will be protected by Chinese laws". This was taken to mean that China would uphold the exploration contract.
On July 4, a Chinese trawler and two launches anchored at Da Lac reef and placed a territorial marker there.
At the July 21-26 ASEAN meeting, the foreign ministers passed a resolution calling for a peaceful solution to the dispute.
On July 25, US Secretary of State James Baker indicated Washington's interest by saying that the United States was prepared to mediate the issue.