Vietnam's prime minister has given the go-ahead for joint oil exploration between Chinese and Vietnamese state oil companies in the Gulf of Tonkin, state media has reported.
The China National Offshore Oil Corporation and the Vietnam Petroleum Corporation (PetroVietnam) agreed on the project in mid-November, said the Vietnam News Agency without providing further details.
Prime Minister Nguyen Tan Dung told PetroVietnam to work with government ministries to ensure the project is in line with Vietnam's laws and delivers economic benefits to the country, said the brief report.
PetroVietnam officials declined to comment.
Known and suspected energy reserves in the South China Sea have long fuelled historic disputes that have centred on the Spratly and Paracel islands, between China, Vietnam, Taiwan, the Philippines, Malaysia and Brunei.
Beijing and Hanoi have also yet to agree on a common sea border in the Gulf of Tonkin, which China calls the Beibu Gulf, located between northern Vietnam and southern China in the northern part of the South China Sea.
As a confidence-building measure, Vietnamese and Chinese naval vessels on December 28 carried out their second joint patrol, following the first such exercise last April, in what both sides have agreed is a common fishing area.
The communist neighbours are ideological comrades but historical foes.
China has repeatedly invaded Vietnam over the centuries, the last time in 1979 after Hanoi's intervention in Cambodia to oust Beijing's Khmer Rouge allies.
They came to blows again in 1988 in the Spratly but normalised ties in 1991. They have since demarcated their common land border but have failed to agree on a sea border.
Last month both governments again asserted their sovereignty over the Spratly and Paracel archipelagoes.