Saturday, July 4, 2015

• China sends four oil rigs to South China Sea amid regional tensions - REUTERS/NGUYEN MINH

A Chinese Coast Guard vessel (R) passes near the Chinese oil rig, Haiyang Shi You 981 (L) in the South China Sea, about 210 km (130 miles) from the coast of Vietnam June 13, 2014.

China has sent four oil rigs into the South China Sea in a sign that Beijing is stepping up its exploration for oil and gas in the tense region, less than two months after it positioned a giant drilling platform in waters claimed by Vietnam.

Coordinates posted on the website of China's Maritime Safety Administration showed the Nanhai number 2 and 5 rigs had been deployed roughly between southern China and the Pratas islands, which are occupied by Taiwan. The Nanhai 4 rig was towed close to the Chinese coast.

The agency did not say who owns the rigs.

Earlier this week, it gave coordinates for a fourth rig, the Nanhai 9, which it said would be positioned just outside Vietnam's exclusive economic zone by Friday.

The announcement comes at a time when many countries in Asia, particularly Vietnam and the Philippines, are nervous at China's increasing assertiveness in the South China Sea, where sovereignty over countless islands and reefs is in dispute.

The Global Times, a popular tabloid published by the Communist Party's official People's Daily, quoted Zhuang Guotu, director of the Center for Southeast Asian Studies at Xiamen University, as calling the rig deployment a "strategic move".

"The increase in oil rigs will inevitably jab a sensitive nerve for Vietnam and the Philippines," Zhuang said.

China's state oil behemoth CNOOC Ltd has said it had four new projects scheduled to come on stream in the western and eastern South China Sea in the second half of 2014.

It was unclear if the four rigs were part of those projects. A CNOOC spokesman declined to comment, but the company has long said that in a bid to boost production it wanted to explore in deeper waters off China.

CNOOC has said it would increase by up to a third its annual capital spending for 2014 to almost $20 billion.

Anti-Chinese violence flared in Vietnam last month after a $1 billion deepwater rig owned by CNOOC Group, the parent of the listed unit, was parked 240 km (150 miles) off the coast of Vietnam.

Hanoi says the rig is in its 200-nautical mile exclusive economic zone and on its continental shelf. China has said the rig was operating completely within its waters.

China claims about 90 percent of the potentially energy-rich South China Sea. The Philippines, Vietnam, Malaysia, Brunei and Taiwan also have claims to parts of the waters

South China Sea Boils: China Sends Oil Rig Near Vietnam Again
Zachary Keck

China has moved an oil rig that was at the heart of a dispute with Vietnam last year to waters near Vietnam again, according to multiple news report. Yesterday, Vietnamese newspapers began reporting, citing the Chinese Maritime Safety Administration (MSA), that China’s Haiyang Shiyou 981 (HD-981) oil rig was being moved to waters where China and Vietnam’s Exclusive Economic Zones (EEZs) overlap. According to the news reports, the platform is now located 17°03'75’' North latitude and 109°59’05’’ East longitude.
In the statement, MSA warned that all ships must stay 2,000 meters away from the rig. The HD-981 will explore for oil and gas in the region between now and August 20, according to the MSA statement.

Last year, the HD-981 was sent deep inside Vietnam’s EEZ, which plunged Chinese-Vietnamese relations to their lowest level in years. Vietnamese ships tried to challenge the oil rig’s deployment, and China sent upwards of 100 vessels to protect the HD-981. Ultimately, after a bitter falling out, Beijing removed the oil rig ahead of schedule.

The oil rig’s current location is not as close to Vietnam as it was last year, which might temper Vietnam’s response to the new provocation. In addition, China is likely to claim the oil rig is within Hainan Island’s EEZ, rather than one of the Paracel Islands, which both Hanoi and Beijing claim.

Still, the new deployment comes amid increasing concerns over Beijing’s aggression in the South China Sea. In recent months, China has undertaken a massive reclamation project on reefs and rocks in the South China Sea, which it is transforming into civilian and military bases. These new islands will enhance China’s ability to project power in the region. China has also been increasing the frequency and sophistication of its military exercises in the region.

Before this latest development, there had been signs that China was engaging in a charm offensive in an attempt to reduce tensions ahead of important bilateral and multilateral meetings, including the U.S.-China Strategic and Economic Dialogue, which took place in Washington earlier this week. For example, China’s Foreign Ministry recently announced that its land reclamations were being wrapped up, although this was partly because the most important ones had already been completed.
As Reuters notes, the oil rig’s deployment comes just weeks before the chief of Vietnam’s Communist Party, Nguyen Phu Trong, is set to visit the United States for the first time. Washington and Hanoi have grown closer in recent years as China’s growing power and aggression in the South China Sea have given the two countries’ common cause.

This new development will only further strengthen Vietnam’s desire to strengthen ties with the United States as a way to balance its more powerful neighbor.


China has removed a controversial oil rig in contested waters of the South China Sea. The rig’s provocative placements in the Paracel islands, claimed by China, Vietnam, and other countries in the region, sparked deadly Vietnamese riots against foreign-owned factories, collisions between Vietnamese and Chinese ships, and fear throughout the region of armed conflict erupting.

The oil rig, operated by China Oilfield Services Limited (CSOL), was originally expected to explore the area around the contested Paracels, claimed by both China and Vietnam, until mid-August. So why has China abruptly left a month early and moved its giant oil rig to the Chinese island of Hainan?

One possibility is that China has proved its point: It can place naval assets wherever it wants in the South China Sea and weather the diplomatic and economic consequences. Beijing’s reaction to the Vietnamese riots (which largely targeted Singaporean, Taiwanese, and South Korean factories) was strangely muted, with none of the nationalistic bluster that accompanies its territorial spats with Japan. The Chinese government’s main diplomatic message was that other regional powers and institutions, such as the Association of South East Asian Nations and the United States, should stay out of China’s disputes with its neighbors.

It’s almost certain that the Chinese explorers didn’t find all that much oil and gas—and perhaps they never expected to in the first place. According to state-owned Xinhua news agency, CSOL found “signs” of oil and gas but gave no estimates of the reserves they discovered. Wang Zhen, deputy director of the CNPC Policy Research Office, told Xinhua: “The area has the basic conditions and potential for oil exploration, but extraction testing cannot begin before a comprehensive assessment of the data.”

Analysis from the US Energy Information administration has concluded that most fields in the South China Sea with discoverable oil and natural gas are in shallow coastal waters, not in the offshore waters near contested islands like the Paracels or the Spratly Islands.

One side effect of China’s incursion has been to raise questions about the ability of the United States to preserve order in the region—even as it drew the US closer to Vietnam. Some US lawmakers have been pushing to lift an arms ban on Vietnam, and a recent survey found that Vietnamese citizens see the United States as their primary ally—and China their biggest threat.

Some within China saw the move as a capitulation to pressure from the US where a resolution was passed this week calling for China to remove its rig. Critical comments circulated Weibo today, with one popular blogger, Sheng Dalin, a reporter for Henan Daily, writing, “Is it really because [CSOL] finished drilling that they withdrew the rig? The US just passed their resolution yesterday!” Another wrote, “Why are Chinese people such cowards?”

China Moves Oil Rig From Contested Waters
Move Could Provide Opening for Beijing and Hanoi to Repair Relations

In this file photo, the Haiyang Shiyou oil rig 981 is pictured in the South China Sea. ASSOCIATED PRESS
BRIAN SPEGELE in Beijing And
China is moving a drilling rig out of South China Sea waters claimed by both China and Vietnam, easing a two-month standoff that sparked deadly riots in Vietnam and tense encounters between Chinese and Vietnamese vessels.

The move could provide an opening for Beijing and Hanoi to repair relations and comes as the U.S. steps up criticism of China's efforts to enforce its claims to the strategically important sea. But China's government said its companies still had the right to explore the contested waters, raising the possibility that tensions could flare again.

China Oilfield Services Ltd., a unit of state-owned China National Offshore Oil Corp., said its deep-water HYSY 981 drilling rig had completed exploration and drilling operations off Triton Island, or Zhongjian Island in Chinese. The island is part of the Paracel Islands chain, which is claimed by both China and Vietnam.

A Vietnam coast guard official confirmed that the oil rig began moving Tuesday night local time. Rear Adm. Ngo Ngoc Thu, vice commander of the Vietnam coast guard, said the Chinese vessels that had been accompanying the rig were also moving. He said Vietnam was keeping its vessels at the site and watching the oil rig's movement.

Chinese officials had previously said the rig's work would be completed by August. A spokeswoman for China Oilfield Services, or COSL, confirmed drilling work had been completed ahead of schedule and said the rig's new intended location, near China's southern island of Hainan, isn't in an area of dispute with other nations.

China's Foreign Ministry said Wednesday that Chinese companies were within their rights to undertake work around the Paracel Islands. It said it opposed interference by Vietnam and had taken "necessary measures to safeguard the safety of operations" by COSL.

Tran Cong Truc, former chief of the Vietnamese government's border committee, said Vietnam would remain vigilant. "China's South China Sea policy is aggressive, so the withdrawal of the oil rig is only a tactic, a responsive measure they need to take right now."

Vietnam's foreign ministry spokesman, Le Hai Binh, said his country was determined to protect its sovereignty and demanded that China not move the oil rig back to "parts of Vietnamese waters stipulated by the U.N. Convention on the Law of the Sea."

Vietnam protested Chinese drilling in the area after it began in early May and had sent coast-guard vessels to confront the rig. Dozens of Chinese and Vietnamese maritime vessels had amassed near the disputed rig, with each side claiming its ships had been violently rammed by the other's.

The rig's deployment there drew criticism from Washington, which has called it provocative. The episode touched off anti-Chinese riots in Vietnam in May, in which five people were killed and hundreds of factories owned by Chinese and other foreign companies were looted and burned.

"A lowering of tensions and the initiation of talks between China and Vietnam will alter the current political dynamics," said Carl Thayer, an expert on maritime security issues. He said such moves would undercut U.S. efforts to make China's maritime claims an issue before a regional group of Southeast Asian nations.

China National Petroleum Corp., the country's largest oil company by production, controls the disputed exploration area, and said it would evaluate data collected during drilling to consider its next phase of work. It said the rig had found signs of oil and natural gas in the disputed waters.

The rig's presence there was viewed by security analysts as part of a recent pattern of Chinese assertiveness in the South China Sea. U.S. officials have pressed China over what they see as unilateral moves that upset regional stability. China rejects what it views as U.S. meddling.

Disputes between China and its neighbors over the South China Sea and East China Sea have emerged as one of the greatest threats to regional peace and prosperity, particularly as China looks to assert greater control over its immediate periphery.

China claims nearly the entire South China Sea as its historical waters, an assertion that brings it into increasing conflict with some of its neighbors, such as Vietnam and the Philippines. In addition to China, parts of the sea are claimed in part by five other governments.

The South China Sea is home to critical shipping channels and is believed to hold sizable oil-and-gas reserves, exploration of which has been hampered by competing claims. The U.S. Energy Information Administration estimates the sea holds around 11 billion barrels of oil and 190 trillion cubic feet in proved and probable reserves.

The rig's withdrawal coincides with a visit by Adm. Jonathan W. Greenert, the U.S. Chief of Naval Operations, to China this week for talks with his counterpart, Chinese navy chief Admiral Wu Shengli.

One of the topics high on their agenda is the implementation of a new code on unplanned encounters at sea that was agreed to by 21 Pacific naval powers, including China, in April. U.S. naval officials have said they hoped all members of the group would observe the code in all places, including waters where China's maritime claims are contested by its neighbors.

But the code isn't legally binding, and Chinese officials have suggested that Chinese ships won't necessarily observe it in what Beijing sees as its territorial waters.
What is the long-term significance of China’s decision to move an oil rig into Vietnam’s exclusive economic zone in May 2014?
One year ago, China’s state-owned China National Offshore Oil Company (CNOOC) moved an exploratory oil rig, Haiyang Shiyou 981 (HD-981), worth an estimated $1 billion, into waters within Vietnam’s exclusive economic zone. The incident sparked a major bilateral crisis between the two countries—both of whom claim the disputed Paracel Islands. In hindsight, the event marked the start of China’s attempts to change the status quo in the South China Sea by committing its civilian and non-military assets to disputed areas.
The timeline of the HD-981 stand-off was recently featured in the U.S. Department of Defense’s 2015 report on China’s military. On May 3, 2014, Hainan province’s Maritime Safety Administration declared that the oil rig would begin drilling operations off the disputed Paracel Islands, ending in August that year. The next day, Vietnam’s government protested the Chinese announcement. China declared a 3 nautical mile security radius around the oil rig, far exceeding the 500 meter safety zone state parties to the United Nations Convention on the Law of the Sea are entitled to under that treaty.
Beginning May 11, Vietnam erupted in anti-China protests. The protests resulted in Chinese businesses being harassed and attacked; several foreign-owned factories were damaged as part of the protests. The Vietnamese media featured incidents off Vietnam’s coast involving Chinese coast guard ships and Vietnamese fishing vessels colliding. China had deployed civilian fishing vessels, coast guard ships, and a limited number of People’s Liberation Army Navy assets to protect the waters around HD-981. On May 26, a Vietnamese fishing boat capsized after colliding with a Chinese fishing boat. Ultimately, China evacuated its citizens from Vietnam after two of its citizens died during the protests.
In June, in an attempt to defuse tensions, Chinese State Councilor Yang Jiechi visited Vietnam for a frosty visit with Vietnamese officials, including the Deputy Prime Minister and Foreign Minister Pham Binh Minh and Prime Minister Nguyen Tan Dung. The visit led to little concrete progress on the dispute, but prevented escalation. Dung remained adamant that China’s actions violated Vietnam’s territorial integrity and sovereignty. Pham, for his part, traveled to the United States later in the year. When he returned to Hanoi, he returned with an assurance that the United State’s long-standing arms embargo against Vietnam would be lifted, specifically for equipment that would help Vietnam improve its maritime safety. The HD-981 incident gave U.S.-Vietnam relations a helpful jolt.
At the time, The Diplomat featured several takes on China’s logic in sending HD-981 into the contested waters. Carl Thayer described the incident as “unexpected, provocative, and illegal.” I explored the reasons the move made strategic sense for Beijing. Dingding Chen claimed that the deployment of the rig was “not a strategic mistake” for China. After China withdrew the rig, in July, sooner than anticipated per the Maritime Safety Administration’s announcement, Thayer offered an analysis, suggesting that political pressure and geopolitical considerations forced China’s hand. He added that the incident and Vietnam’s response suggested that Hanoi had demonstrated resolve in the face of Chinese assertiveness. (Meanwhile, Robert Farley cautioned against over-emphasizing reputational costs in understanding the crisis.) Other commentators suggested that the early withdrawal suggested a “recalibration” of China’s policy.
The HD-981 incident will remain a case study in China’s approach to asserting its territorial claims in the South China Sea. Of course, since May 2014, we’ve seen that the extent of China’s ambitions in its near seas is growingFor example, the topic du jour here at The Diplomat these days seems to be China’s massive land reclamation activities in the Spratly and Paracel Islands. HD-981 was by no means the “beginning” of China’s assertiveness in the South China Sea, but it was a clear inflection point. A year later, China’s relations with Vietnam have somewhat recovered, but they won’t be back to the pre-May 2014 “normal” anytime soon. Vietnam’s skepticism of China’s South China Sea intentions has become more of a driver of its foreign and security policy than ever before. For Hanoi, everything changed last summer.

In an unexpected development, China’s Haiyang Shiyou 981 oil rig is back in contested waters.

Reports began emerging in the Vietnamese media on Thursday that China’s Haiyang Shiyou 981 (HD-981) oil rig—the centerpiece of last summer’s clashes between Vietnam and China—was being redeployed off the coast of China’s Hainan Island, in waters where the disputed exclusive economic zones (EEZs) of Vietnam and China overlap and west of the disputed Paracel Islands (known as the Xisha Islands in China). Vietnamese reports, citing a China Maritime Safety Administration (MSA) announcement, noted that the rig was deployed to the coordinates of 17°03’75’’ North and 109°59’05’’ East, approximately 120 nm from Vietnam’s coast, 63 nm from China’s Hainan Island coast, and 87 nm from the nearest Island in the Paracels (mapped below).
Source: Google Maps
According to China’s MSA, the rig will explore for oil and gas from June 25 to August 20. The MSA’s announcement, pictured below, warns nearby vessels that sailing “within 2000 metres of [HD-981]” is “prohibited.” According to one Vietnamese maritime law enforcement source who spoke to Tuoi Tre, Vietnamese authorities are closely watching HD-981′s movement. M. Taylor Fravel, a U.S.-based China scholar,noted that “EEZ overlap at that location is about 100 percent; both have active [oil] blocks on their side.” The coordinates given by China’s MSA suggest that HD-981 is closest to Vietnamese oil block 115, but the oil rig remains closer to China than Vietnam. Greg Poling, an analyst working on the South China Sea at the Center for Strategic and International Studies, notes that the coordinates provided by China’s MSA suggest that the rig is not yet within disputed waters (see map below).
Courtesy: Greg Poling/Center for Strategic and International Studies
China’s move represents a re-ignition of Sino-Vietnamese tensions less than a year after China withdrew HD-981 after a series of clashes with Vietnam. As I wrote last month, in a reflection on the clashes a year after they began, China’s HD-981 deployment set off widespread anti-China protests in Vietnam, leading to attacks on Chinese citizens and business in the country. Additionally, China’s deployment of a mix of civilian, coast guard, and People’s Liberation Army Navy (PLAN) vessels with HD-981 inflamed tensions further.
Though it’s often unwise to read too far into the tea leaves on the timing of China’s moves in the South China Sea, this particular incident merits a closer look. Barely two weeks have passed since China began a “charm offensive” of sorts prior to the U.S.-China Strategic and Economic Dialogue. East of the Paracels, in the Spratly Islands, China announced that most of its land reclamation work had been completed and would stop (though construction would continue). My colleagues and I here at The Diplomat took that to mean that we would see a period of relative calm, probably due to the presentation of oral arguments at the Permanent Court of Arbitration in The Hague on the Philippines’ case against China but certainly given Chinese President Xi Jinping’s scheduled September visit to the United States.
The timing is also telling in the wake of last year’s episode involving HD-981. As some readers may recall, China actually withdrew HD-981 earlier than anticipated last year, moving to deescalate the crisis shortly after Chinese State Councilor Yang Jiechi visited Hanoi. As my colleague Shannon wrote then, the early removal of HD-981 certainly didn’t indicate that China was acquiescing to Vietnam’s demands or that it was relinquishing its right to operate in the disputed waters. One theory was that China may have been taking advantage of the impending typhoon season in the South China Sea to deescalate the crisis. The dates presented for HD-981′s exploration this time around seem to align with that reading. Depending on how events proceed between China and Vietnam in the coming weeks, Beijing may see this one out all the way through August 20.
Between China’s continuing construction activities in the Spratlys, the impending oral arguments in The Hague, increasing U.S. freedom of navigation operations, Japan’s increasing involvement, and now renewed tensions off the Paracels, the summer of 2015 could be the hottest one yet in the South China Sea. We’ll be keeping a close eye on the next developments here at The Diplomat.