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Vietnam-China oil rig flare up heightens threat perception in region, say experts

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The recent flare-up between Vietnam and China over an oil rig in the disputed waters of the South China Sea is expected to "further heighten the threat perception among ASEAN states," but "ASEAN protestations will not move China one inch," experts on the issue said this week.

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The Vietnam government on Wednesday held a press conference and briefed journalists about the "tense situation" in the South China Sea, where a Chinese oil rig has been preparing to drill for oil.

Vietnam claims the China National Offshore Oil Corp. deepwater rig Haiyang Shiyou 981 was "totally" in its waters and over the weekend intensified its protests against the presence of the rig and a large number of Chinese vessels, including military ones, in the area which it said was "illegal" and violated Vietnam's sovereignty.


Vietnam demanded the rig be withdrawn from the location, which it said lies within its continental shelf and exclusive economic zone.

Then on Wednesday Vietnamese government officials said Chinese vessels had turned high-powered water cannons on Vietnamese patrol ships and rammed several of them. The incidents injured six personnel on the boats and damaged the ships, Hanoi said. It released photos and videos of the incidents to support the claims Wednesday.

TENSE SITUATION

"The situation was very tense," Ngo Ngoc Thu, deputy commander of Vietnam's maritime police, said at the briefing.

"Vietnam's maritime police and fishing protection forces have practiced extreme restraint and will continue to hold on there. But if [the Chinese ships] continue to ram into us, we will respond with similar self-defense," Thu said.

The collisions took place near the oil rig, which is located in Vietnam's Blocks 142 and 143, about 120 miles off the Vietnam central coast.

"China's decision to introduce an oil rig accompanied by numerous government vessels for the first time in waters disputed with Vietnam is provocative and raises tensions," Jen Psaki, US State Department Spokesperson said Wednesday, adding that the US was very concerned about the dangerous conduct and intimidation by vessels operating in this area.

The issue is expected to take centerstage at the weekend meet of Southeast Asian leaders in Myanmar.

"China's actions on the eve of the ASEAN meeting in Myanmar will put South China Sea issues on the top of the agenda," AFP reported Wednesday quoting Carl Thayer, an expert on the region at the University of New South Wales. But it will not ill not "move China one inch," he added.

"The one thing that is certain is that China's newest provocation will further heighten the threat perception among ASEAN states and drive them closer to each other and interested outside parties, especially Japan and the US," Ernest Bower and Gregory Poling, experts at the Center for Strategic and International Studies in Washington, D.C., said in a report Wednesday.

When asked about the possibility of Hanoi taking the dispute with China to international arbitration, Tran Duy Hai, deputy chairman of the Vietnam National Border Committee said at the briefing: "We cannot exclude any measures, including international legal action, as long as it is peaceful."

The Philippines has already taken its dispute with China to an international arbitration tribunal in The Hague.

Bower is Senior Adviser and Sumitro Chair for Southeast Asia Studies at CSIS, while Poling is Fellow, Sumitro Chair for Southeast Asia Studies and Pacific Partners Initiative at CSIS.

LIKELY REASONS BEHIND THE MOVE

That the Chinese moved ahead in placing their rig immediately after President Barack Obama's visit to four Asian countries in late April underlines Beijing's commitment to test the resolve of Vietnam, its ASEAN neighbors and Washington in sea disputes, the CSIS report said.

Furthermore, the rig was placed near the edge of two hydrocarbon blocks that were discovered by Hanoi, though had not been offered for exploitation to foreign oil and gas companies. Blocks 118 and 119, where US-based ExxonMobil discovered substantial oil and gas reserves in 2011 and 2012, were also nearby, the report said.

The discoveries help explain why CNOOC chose to place the oil rig in that location, it added.

State-owned PetroVietnam's general director Do Van Hau said Wednesday that China will find it very difficult to conduct oil and gas operations in the current deepwater location.

"Exploratory drilling is one story but [oil and gas] production is much more difficult. Because in order to produce oil and gas in a certain area, we have to construct many fixed structures and conduct several oil and gas operations related to further exploration and appraisal. Pumping oil and gas in a deepwater areas requires a huge investment program," said Hau.

Since 1972, Vietnam has conducted seismic surveys in its Blocks 142 and 143 where the CNOOC rig is located. No oil and gas discovery has been made in the two blocks, which have water depth of about 1,000 meters, he said.

China claims almost the entire oil and gas-rich South China Sea, rejecting rival claims to parts of it from Vietnam, the Philippines, Taiwan, Malaysia and Brunei.

--Dao Dang Toan, newsdesk@platts.com
--Edited by Haripriya Banerjee, haripriya.banerjee@platts.com

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