Vietnam Protests Against China’s “Mobile Sovereign Territory” aka Deepwater Drilling Rig

PetroVietnam points out the location of the Haiyang Shiyou 981 (HD-981) drilling rig

May 5 (Bloomberg) — Vietnam denounced China for setting up an exploration rig in waters off its central coast disputed by the two nations, raising the prospect of an escalation of tensions between the neighboring countries.

Vietnam is “strongly opposed” to any actions within waters it has sovereignty over, Foreign Ministry spokesman Le Hai Binh said in a statement. State-owned Vietnam Oil & Gas, known as PetroVietnam, said it sent a letter to China National Offshore Oil Corp. asking the company to stop activities and remove the rig.

China National Offshore on May 2 placed the rig about 120 nautical miles off the Vietnamese coast, PetroVietnam said in a statement on its website. Calls to a Beijing-based spokesman for the Chinese company weren’t answered. A Chinese government maritime agency said the rig will be in place until Aug. 15, Vietnam’s Foreign Ministry said on its website.

Vietnam said the rig’s placement is within its exclusive economic zone, citing its proximity to the Vietnamese coast. The government also reiterated its claims to the Paracel and Spratly islands, also claimed by China. The Philippines, which is also a claimant in the Spratlys dispute, in March called China a “threat to our security” as it protested Chinese attempts to prevent resupply of a Philippine vessel in the area.

China’s Foreign Ministry spokeswoman Hua Chunying told reporters in Beijing today that the the oil rig was erected in Chinese territory.

‘Bilateral Issue’

“Previously these kinds of disputes tended to take place over survey ships, but this is a drilling rig, which would suggest an escalation,” said Ian Storey, a senior fellow at the Institute of Southeast Asian Studies in Singapore. “Given the heightened tensions in the area over the past few years, this has the potential to become a serious bilateral dispute. It will be interesting to see what further action Hanoi takes beyond issuing a protest.”

PetroVietnam’s statement included a map showing the Chinese rig as in an area east of exploration blocks Vietnam has designated as blocks 118 and 119.

Further Reading: CNOOC Chairman Calls New Rig “Mobile Sovereign Territory“

ExxonMobil Corp. drilled in block 118 in 2011 and 2012, and in block 119 in 2011, according to a 2013 IHS oil and gas exploration and production map. ExxonMobil has made a ‘huge’’ discovery in its drilling in Vietnam, PetroVietnam Chief Executive Do Van Hau said in November, estimating reserves at 6 trillion to 8 trillion cubic feet of natural gas and describing the find as one of the country’s biggest.

“After anyone makes a big discovery, people will look north, south, east and west of it,” said Kenneth Charsinsky, managing director of Australia’s Neon Energy Ltd., part of a group that has drilled in block 120, to the southwest of the disputed area. “From a geological perspective, anywhere near that area where you have a similar play type, when you have one that works it certainly makes other areas nearby more attractive.”

Copyright 2014 Bloomberg.

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