Tensions flare over South China Sea energy reserves

Disputes over ownership of oil and gas reserves in the South China Sea have sparked clashes between Chinese, Vietnamese and Malaysian coast guard vessels and drilling ships in recent weeks.

Chinese coast guard ships have harassed drilling vessels operated by Malaysia and Vietnam, while a state-owned Chinese vessel has started carrying out seismic surveys of disputed blocks located in Vietnam's exclusive economic zone (EEZ), US think-tank the Center for Strategic and International Studies (CSIS) said.

The Haiyang Dizhi 8 vessel, owned by the China Geological Survey, started surveying for oil and gas on 3 July in blocks located well within Vietnam's 200 nautical mile (370km) EEZ and about 180 nautical miles from the Spratly islands, which are claimed by both countries. The survey vessel is being protected by Chinese coast guard ships, which are preventing attempts by Vietnamese law enforcement vessels to intervene, CSIS said.

The incident comes soon after another Chinese coast guard vessel, the Haijing 35111, started patrolling block 06-01 in the Vanguard Bank off Vietnam in mid-June. The block is key to the Nam Con Son gas project, which is operated by Russia's state-controlled Rosneft and supplies up to 10pc of Vietnam's energy needs, according to CSIS. Rosneft last year rebuffed warnings from Beijing not to drill in the area.

Rosneft contracted a Japanese vessel to drill in the block in May. The "highly provocative" survey work being carried out by the Haiyang Dizhi 8 is likely meant to punish Hanoi for allowing the new drilling, CSIS said.

Block 06-01 is close to another contested area, block 136-03, where Spanish integrated firm Repsol abandoned exploration drilling in 2017 following pressure from Beijing.

Vietnam has taken a "comprehensive range of peaceful measures" to safeguard its waters and protect its sovereign rights, the Vietnamese foreign ministry said yesterday, without giving details. Hanoi should respect China's jurisdiction over the waters and not take any actions that could complicate matters, China's foreign ministry said today.

The presence of Vietnamese and Chinese vessels in the contested areas makes the latest incidents one of the most serious energy-related disputes in the South China Sea since 2014, when China moved its deepwater rig Hai Yang Shi You 981 near to the contested Paracel islands. Chinese vessels rammed Vietnamese ships and fired water cannons, Hanoi said at the time, prompting violent anti-Chinese protests in Vietnam.

The latest disputes are not limited to Vietnamese waters. China's Haijing 3511 vessel conducted heavy patrols off Sarawak in Malaysian Borneo in May before heading to Vietnam, CSIS said. The patrols covered part of block SK-308, which is licensed to Shell, and included "intimidating behaviour" towards a drilling rig operated by Malaysia's Sapura Energy, CSIS said. The incident has not been confirmed by either company.

Malaysia is one of several southeast Asian nations with competing claims to areas of the South China Sea, but it has largely steered clear of direct confrontations with Beijing.

China's actions off Vietnam and Malaysia "show that Beijing is increasingly willing to employ coercion and the threat of force to block oil and gas operations by its neighbours, even while pursuing its own energy exploration in disputed waters", CSIS said.

China claims almost all of the South China Sea under its "nine-dash" line. The sea may hold large energy reserves — 11bn bl of oil and 190 trillion ft³ of gas, according to estimates from US government agency the EIA — but competing territorial claims have hampered exploration work.