Thu, Aug 29, 2019 - Page 9 News List

China, Vietnam spar on high seas over US$2.5 trillion in energy

The US has accused Beijing of escalating efforts to intimidate other claimants out of developing resources in the South China Sea

By Philip Heijmans  /  Bloomberg

Illustration: Mountain People

When a Chinese state-owned survey vessel sailed into waters off Vietnam’s coast early last month, it unleashed a high-seas standoff with trillions of dollars at stake that risks drawing in Russia and the US.

For weeks now, the Haiyang Dizhi 8 has zigzagged across a square block of water to study the seabed in an active drilling block operated by Russia’s state-owned Rosneft Oil PJSC.

Satellite images show more than a dozen Chinese and Vietnamese Coast Guard ships maneuvering around the surveyor, which at one point included a heavily armored Chinese cutter known as “The Beast” that is larger than most US destroyers.

The location is particularly worrying for smaller nations looking to extract oil and gas from disputed parts of the South China Sea: It sits three times closer to Vietnam than the Chinese mainland.

While Beijing has long sought to disrupt exploration in parts of the sea that fall under its expansive claims, its naval buildup and moves to construct military assets on disputed reefs over the past decade have allowed it to more aggressively assert its interests further from its shores.

“It’s the growing intensity or frequency of these occurrences that truly differs from the past,” said Collin Koh, a research fellow at Singapore’s S. Rajaratnam School of International Studies.

The current standoff “could’ve sufficed to make investors think twice about staying on that offshore project, and this might even serve as a deterrence to future investors who might want to anticipate and avoid being embroiled in such troubles,” Koh said.

The Chinese move comes just as it is holding negotiations on joint exploration in a disputed area with Manila, which has sought closer ties with Beijing since Philippine President Rodrigo Duterte came to power.

Vietnam has persistently rejected China’s so-called “nine-dash line” map of the sea as a basis for cooperating on energy resources, prompting tensions to increase as Beijing’s military strength grows.

The US this week criticized China’s move to send the survey to Vietnam as “an escalation by Beijing in its efforts to intimidate other claimants out of developing resources in the South China Sea.”

A US Department of State statement said that China was blocking Southeast Asian nations from accessing an estimated US$2.5 trillion in unexploited hydrocarbon resources.

For Vietnam — a country that produced 22 million to 33 million tonnes of oil from its offshore blocks each year, and has as much as 4.4 billion tonnes in crude oil and gas reserves there — armed Chinese ships within its maritime border could have a devastating impact on an industry that made up 20 percent of Vietnam’s GDP from 1986 to 2009.

China defended the provocation, saying Vietnam should not have carried out its decision in May to unilaterally begin exploitation work in a “Chinese jurisdiction.”

“This is the cause of the current situation,” Chinese Ministry of Foreign Affairs spokesman Geng Shuang (耿爽) said on Friday last week.

Rosneft declined to comment.

While the Philippines produces very little offshore oil and gas by comparison, data shows deposits in the disputed Reed Bank (Lile Bank, 禮樂灘) to the west could amount to as much as 5.4 billion barrels and 55.1 trillion cubic feet of oil and gas respectively.

However, any attempt to extract it would likely face strong resistance from China.

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