OPINION: This month's decision by outgoing US President Donald Trump to add China National Offshore Oil Corporation (CNOOC) to a blacklist of sanctioned companies with alleged ties to the Chinese military has escalated tensions between China and the US and will likely curb CNOOC’s access to US investors.

So far, however, the move has had a limited impact on the company’s operations and its partners, even though the executive order issued by Trump prevents US investors from buying securities of CNOOC’s listed arm, CNOOC Ltd, starting late next year.

Under Trump’s executive order, US investors are banned from owning or trading any securities that originated from or are exposed to blacklisted Chinese companies, whose numbers now stand at 35.

CNOOC Ltd was listed on the New York Stock Exchange and the Stock Exchange of Hong Kong Ltd on 27 and 28 February 2001, respectively.

China has called on the US to stop abusing the concept of national security.

“China firmly rejects the United States’ unwarranted oppression against Chinese companies,” said China’s Ministry of Foreign Affairs spokeswoman Hua Chunying.

CNOOC Ltd said the company is "comprehensively assessing the impact of the situation on the group and will closely monitor relevant follow-up developments”.

Many see the latest sanctions as the outgoing US administration’s last shot at China’s state-owned enterprises as part of its constant attacks on China since Trump took power four years ago.

Foreign companies, especially US companies operating in China, have played down the possible impact on CNOOC, pointing out the sanction has been imposed by the Department of Defense, which has no authority over commercial activities.

“The sanction is more related to CNOOC’s possible oil and gas drilling and development activities in the disputed areas of the South China Sea, where exploration and development could trigger military clashes,” said one official.

Other officials said foreign companies working with CNOOC will normally heed executive orders, including sanctions, emanating from the US Department of Commerce.

“In that case, foreign companies would stop providing services or equipment to CNOOC for offshore oil and gas developments,” said a second official, adding that CNOOC has not been identified by the Department of Commerce as one of 24 Chinese companies in its Entity List alleged to have helped the Chinese military construct artificial islands in the South China Sea.

“It's just one of the punitive measures the Trump administration has (imposed on) China, which damages the business relationship between the two countries in a broader sense,” he said.

Sources said Chinese oil and gas companies are assessing the technology and equipment they have been importing from the US to develop the country's hydrocarbon reserves and are ready to roll out a plan to beef up domestic R&D and so reduce reliance on external suppliers.

CNOOC has been working closely with major US companies and contractors, including ExxonMobil, ConocoPhillips, Hess, Chevron, NOV and Baker Hughes, on offshore projects both in and outside China.

In particular, it has strong links with NOV and Baker Hughes to supply drilling derricks for offshore rigs and subsea equipment for deep-water projects.

While being sanctioned by the US Department of Defense is a challenge, CNOOC - which operates in about 20 countries outside China and works with many foreign players in domestic waters - will hope Trump does not also add it to the US Entity List.

That would take a tremendous toll on the company's upstream activities, at least until China can go it alone.

(This is an Upstream opinion article.)