China's move to set up a military garrison at Sansha on disputed Yongxing Island (also known as Woody Island) in the Xisha chain (claimed by the Philippines as the Paracels), along with creating a city administration for the island which has heretofore had few permanent inhabitants, is escalating tensions in the South China Sea (or, as Manila has it, the West Philippine Sea)—the key theater in Washington's new cold war with Beijing. On Aug. 4, Beijing summoned a senior US diplomat, the embassy's deputy chief of mission Robert Wang, over State Department criticism of the move. State Department spokesman Patrick Ventrell said in a statement the day before that the US is "concerned by the increase in tensions in the West Philippine Sea and [we] are monitoring the situation closely."

Ecuador will use the pipeline that links Peru's northern Amazon oil zone to the Pacific coast to transport crude under a deal reached this week. Quito's Non-Renewable Natural Resources Minister Wilson Pastor hailed the bi-national accord as "true energy integration, in which two countries, Ecuador and Peru, are joining forces and needs." He said Ecuador will pay a fee of $10 per barrel of crude extracted from the southern zone of the Ecuadoran Amazon. A 100-kilometer feeder pipeline will be built from Ecuador's border to the Oleoducto NorPeruano, which runs to Bayovar port in Puira region. The deal could facilitate a major industrial thrust into Ecuador's southern Amazonian region. Most of Ecuador's exported oil currently comes from the northern part of its Amazon region, via the SOTE and OCP pipelines. (EFE, Aug. 9; RPP, Aug. 8; A Barrel Full website)

South Sudan and Sudan announced Aug. 4 they have reached a deal over the south's use of Khartoum's oil pipelines and distribution of oil revenues—potentially ending a dispute that prompted South Sudan to shut down its oil production in January and nearly led to war. Under the deal reached at talks in Addis Ababa, South Sudan will pay $9.48 per barrel to use one of Sudan's pipelines to export crude, and $11 to use a second leading to a refinery before reaching a sea terminal. Khartoum had originally demanded $36 per barrel.

Gunmen attacked two ships off the coast of Nigeria's oil-rich southern delta Aug. 4, killing two naval troops protecting the vessels and seizing four foreign workers before fleeing.  Six naval troops were aboard the vessel, which belongs to the Sea Truck oil services company. The Nigerian navy has dispatched boats and a helicopter to the area. Sporadic attacks on oil infrastructure in the Niger Delta have continued despite a 2009 amnesty for militant groups. (AP, Radio Netherlands, Aug. 4)

A federal court in Brazil on Aug. 1 ordered Chevron and drilling company Transocean to suspend all oil drilling in the country within 30 days in the wake of two oil spills off the coast of Rio de Janeiro. A judge for Brazil's Regional Federal Court of the Second Region ruled that each company must pay 500 million reals, or $244 million, for every day that they do not comply with the suspension. In November, a Chevron appraisal well leaked 155,000 gallons of oil. In March, oil started leaking again from the well and Chevron suspended production in that oil field. In its ruling, the court rationalized that two oil spills in the span of four months demonstrated that Chevron and Transocean cannot operate the wells safely. Chevron plans to appeal the ruling, saying that it complied with all applicable laws and industry standards. 

Regional security has been seen as the biggest challenge for the planned trans-Afghan gas pipeline—officially the Turkmenistan-Afghanistan-Pakistan-India (TAPI) project, which would pass the war-torn Afghan provinces of Herat and Kandahar as well as Pakistan's restive Baluchistan province. But recent reports of a rival pipeline project being negotiated between China, Turkmenistan and Afghanistan may pose a more fundamental threat to the TAPI. On June 6-8, on the sidelines of the Shanghai Cooperations Organization summit in Beijing, Afghan President Hamid Karzai met with Chinese President Hu Jintao and China National Petroleum Corporation's (CNPC) head Jiang Jiemin to discuss the proposal. CNPC offered to conduct a technical and economic feasibility study for the proposed project on Afghan and Tajik territories. That the route would avoid the conflicted Pashtun-dominated areas of southern Afghanistan, making the project more attractive for investors. India's Institute for Defence Studies and Analyses says the Chinese pipeline could undermine the TAPI "akin to the manner in which TAPI played spoiler to the Iran-Pakistan-India (IPI) pipeline project." (IDSA, July 31)