TAIPEI, Taiwan (TheStreet) -- China's landfill projects in the South China Sea, though unpopular with its neighbors and the U.S., should boost Chinese state oil drillers Cnooc Ltd. (CEO) and PetroChina (PTR) , both of which trade in the U.S., because an expansion or strengthening of China's claims would smooth exploration for those companies.
China's addition of landfill to otherwise submerged atolls south of its mainland near the existing Spratly islands effectively creates islets that can be used for construction of military airstrips, expansion of an exclusive economic zone and air-defense surveillance.
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The construction is occurring in a disputed area. Besides China, Brunei, Malaysia, the Philippines and Vietnam all lay claim to some of the islands, atolls and coral reef that dot the South China Sea.
"Short of military action, there's not anything we can do," says Ramon Casiple, a blogger and political analyst in the Philippines. Manila is asking the United Nations to negate China's claim. "Diplomatic action has been tried before," Casiple says.
The two state oil giants are quiet about their government's creation of land.
New York-listed Cnooc, China's largest producer of offshore oil and gas, declined to say whether China's creation of islands would expand the company's scope of exploration or make existing work safer -- the two most likely advantages of Beijing's landfill islets. Company publicist Michelle Zhang said only that Cnooc was on track to fulfill South China Sea projects that it outlined at the beginning of the year.
PetroChina public-relations representative Mao Zefeng did not answer calls on Thursday. His company is the New York-traded arm of state-owned China National Petroleum Corp., the country's largest oil producer.
Tighter defense of China's exclusive ocean economic zone may also disrupt marine shipping, a possible inconvenience to foreign-owned carriers such as Denmark's Maersk (AMKBF) and Singapore's Neptune Orient Lines (NPTOY) , though some shippers say they have already found South China Sea routes that keep their vessels out of any hot water.