China reportedly threatens Vietnam into ending energy exploration in South China Sea
- China threatened Vietnam with a maritime attack over drilling in the disputed South China Sea, the BBC reported
- Hanoi then ordered Spain’s Repsol, whose subsidiary was conducting the drilling, to stop, the BBC said
Sunday, 23 Jul 2017 | 11:00 PM ET CNBC.com
Vietnam stopped a company from exploring for energy in contested waters of the South China Sea after taking threats from Beijing, the BBC reported early on Monday.
Talisman-Vietnam, a subsidiary of Spanish energy firm Repsol, commenced gas-drilling operations in an area about 400 kilometers off Vietnam’s coast earlier this month, but Hanoi has since ordered Repsol to leave the zone, the BBC said, citing an unnamed source.
Last week, Beijing warned Hanoi that it would attack Vietnamese bases in the Spratly Islands if drilling continued, the BBC continued.
Beijing claims tremendous area
The world’s second-largest economy claims a massive section of the South China Sea that extends roughly 1,000 miles from its southern shores. The huge area is home to significant energy deposits and the world’s busiest shipping routes. Vietnam, the Philippines, Malaysia, Brunei and Taiwan also assert sovereign rights over parts of the international waterway.
The site of Talisman-Vietnam’s operations is known as Block 136-03 in Vietnam and Wan-an Bei 21 in China. In 2014, Hong Kong-based firm Brightoil bought the Chinese rights to the area, according to the BBC.
Hanoi’s compliance with Chinese threats, if true, could spell bad news for Manila and Jakarta, which recently announced bold moves in the tension-ridden region.
This month, the Philippines suggested it could resume oil and gas drilling in the Reed Bank after a three-year suspension. Meanwhile, Indonesia has renamed the northern side of its exclusive economic zone in the South China sea and could soon use its navy to protect resource exploration.
Read the BBC’s full story here
South China Sea: Vietnam halts drilling after ‘China threats’
Vietnam has reportedly terminated a gas-drilling expedition in a disputed area of the South China Sea, following strong threats from China.
A source in the south-east Asian oil industry has told the BBC that the company behind the drilling, Repsol of Spain, was ordered to leave the area.
It comes only days after it had confirmed the existence of a major gas field.
Those reports have been corroborated by a Vietnamese diplomatic source.
According to the industry source, Repsol executives were told last week by the government in Hanoi that China had threatened to attack Vietnamese bases in the Spratly Islands if the drilling did not stop.
China claims almost all of the South China Sea, including reefs and islands also contested by other nations.
The drilling expedition began last month in an area of sea about 400km (250 miles) off Vietnam’s south-east coast.
The Vietnamese call the region Block 136-03 and have leased it to a company called Talisman-Vietnam, a subsidiary of Repsol.
China calls it Wanan Bei-21 and has leased the same piece of seabed to a different company.
Exactly which company is not clear. In 2015, the Chinese rights were sold to a Hong Kong-listed company called Brightoil, but it has recently denied owning them.
Two of the directors of Brightoil are senior members of the Chinese Communist Party.
Talisman-Vietnam was formerly owned by the Canadian company Talisman, but since 2015 has been part of the Spanish-owned Repsol group.
One analyst, who did not want to be named, estimated that Repsol has spent about $300m on developing the field so far.
It has therefore come as a surprise to observers that Vietnam should have backed down so quickly.
In 2014 coastguard vessels and other ships belonging to China and Vietnam confronted each other in a different area of the South China Sea, further north, near the Paracel Islands.
Since then the two countries have tried to avoid confrontation.