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China Risks Flare-Up over Malaysian, Vietnamese Gas Resources
China risks flare-up over Malaysian, Vietnamese gas resources.

Twice in the last six weeks, the same China Coast Guard (CCG) vessel has harassed oil and gas operations by its neighbors in contested waters on opposite sides of the South China Sea. A Chinese state-owned vessel, meanwhile, has been undertaking a seismic survey of oil and gas blocks off the Vietnamese coast.

This risks a confrontation between the contingent of CCG and militia boats escorting the survey ship and a group of Vietnamese vessels dispatched to the area. The situation also reveals a double-standard: Beijing appears to be committed to preventing new unilateral oil and gas activities by its neighbors anywhere in the “nine-dash line,” which demarcates its claims in the South China Sea, even as it explores and exploits hydrocarbons in contested waters.

On the Trail of Haijing 35111

CCG vessel Haijing 35111 spent late May patrolling waters near Luconia Shoals off the coast of Malaysia’s Sarawak State. While there, it prevented the operations of the Sapura Esperanza drilling rig, according to previously unverified reports that emerged on social media a month later. These reports were accompanied by compelling images of the 35111 in close proximity to the rig.

Subsequent Chinese blog posts, since removed, backed up these reports and claimed that a second ship, Haijing 46302, was also engaged in the operation around the Sapura Esperanza. While AMTI cannot confirm the presence of the 46302, publicly available Automatic Identification System (AIS) data, which most oceangoing vessels over 300 tons are required to broadcast, indicates that the 35111 was operating in the area and engaged in highly provocative behavior toward other vessels.

Since 2013, China has maintained a near-constant coast guard presence around Luconia Shoals, most of which are underwater at high-tide but still claimed as islands by Beijing and Taipei. They lie on the Malaysian continental shelf, surrounded by oil and gas reserves that Malaysia has tapped for decades. China’s patrols are often centered on Luconia Breakers, which is the only part of the shoals that likely contains dry land. That remains a matter of debate, but if true, it would mean Luconia Breakers generates its own 12-nautical-mile territorial sea.

From May 10 to May 27, AIS broadcasts by the Haijing 35111 show that it was heavily patrolling the area around Luconia Breakers, including part of oil and gas block SK 308. That block is licensed to Sarawak Shell, a subsidiary of Royal Dutch Shell. Sapura Drilling recently said it had won a contract for the Sapura Esperanza rig to drill a series of new wells at natural gas field F14, one of three fields Sarawak Shell is developing in block SK308.

AIS signals also show that two Malaysian offshore supply vessels, the Executive Excellence and Executive Courage, spent all of May traveling back and forth between block SK 308 and the coast of Sarawak, apparently servicing the Sapura Esperanza. On May 21, the Haijing 35111 circled provacatively close to the vessels, coming to within 80 meters. This data supports the social media reports concerning the 35111’s harassment of the Sapura Esperanza and shows that the CCG ship engaged in intimidating behavior toward ships servicing the rig in a way that could have impeded the drilling operations.

Haijing 35111 Picks a New Target

At the end of May, the Haijing 35111 returned to port in Hainan for a few days before heading south again. Since June 16, it has been patrolling an area of the seabed about 190 nautical miles off the coast of southeastern Vietnam. The patrols are centered on oil and gas Block 06-01, which is situated northwest of Vanguard Bank on the Vietnamese continental shelf. It is 172 nautical miles from the nearest disputed high-tide feature, Spratly Island, and falls within China’s nine-dash line.

The block is key to the Nam Con Son project, which BP and ConocoPhillips developed in the early 2000s to carry gas by pipeline to the mainland. Today, natural gas from Block 06-01’s Lan Do field provides up to 10 percent of Vietnam’s total energy needs. Russia’s Rosneft took over as operator of the block in 2013 when it acquired TNK-BP. In May 2018, Rosneft contracted the Hakuryu-5, a semi-submersible rig owned by Japan Drilling Company, to drill a new production well in 06-01 at a second gas field called Lan Do.

In response, China’s Ministry of Foreign Affairs warned that “no country, organization, company or individual can, without the permission of the Chinese government, carry out oil and gas exploration and exploitation activities in waters under Chinese jurisdiction. We urge relevant parties to earnestly respect China’s sovereign and jurisdictional rights and not do anything that could impact bilateral relations and regional peace and stability.” This followed two incidents in July 2017 and March 2018 in which Chinese threats forced Vietnam to cancel drilling work in nearby oil and gas blocks by Spain’s Repsol.

Apparently undeterred, Rosneft went ahead with the drilling at Lan Do and another field, Phong Lan Dai, in Block 06-01. In May 2019, Rosneft contracted the Hakuryu-5 to drill another well in 06-01. Satellite imagery above confirms that the rig was on-site by May 18.

AIS signals show that two Vietnamese offshore supply vessels, the Sea Meadow 29 and Crest Argus 5, have been traveling between Vung Tau on the Vietnamese coast and Block 06-01 regularly since May to service the Hakuryu-5. Using the same tactics employed around the Sapura Esperanza, the Haijing 35111 has been operating in a threatening manner near these vessels in an apparent effort to intimidate them. For instance, on July 2 the vessels were leaving the Hakuryu-5 when the 35111 maneuvered between them at high speed, passing within 100 meters of each ship and less than half a nautical mile from the rig.

The 35111 continues to operate around the Hakuryu-5, which was reported to be on a 60- to 90-day contract. This suggests that China has not yet accomplished its goal and the drilling continues, though whether the operations have been hampered is unknown. This episode also reveals the value of Beijing’s artificial islands to its grey zone tactics in the South China Sea. After patrolling Block 06-01 for nearly a month, the 35111 traveled to the Chinese outpost on Fiery Cross Reef from July 12 to 14, presumably to resupply, before returning to its post near the Hakuryu-5.

China Raises the Stakes

On July 3, the Haiyang Dizhi 8, a survey vessel owned by the government-run China Geological Survey, began surveying a large area of seabed northeast of the standoff at Block 06-01. Its activities have been tracked in near real-time by the U.S. Naval War College’s Ryan Martinson and others on social media.

The Haiyang Dizhi 8 is undertaking an oil and gas survey across two blocks, Riji 03 and Riji 27. China declared these and seven other blocks off the coast of Vietnam open for foreign bidding in 2012, though it had no takers. The survey’s timing could be a coincidence, but it seems more likely meant to punish Vietnam for allowing Rosneft’s drilling in Block 06-01. In either case, it is highly provocative. The two blocks sit well within 200 nautical miles of Vietnam. The survey is being conducted up to 180 nautical miles from the nearest disputed high-tide feature, Spratly Island. The blocks also sit just north of the isolated and extremely vulnerable DK-1 platforms that Vietnam occupies on its continental shelf southwest of the Spratlys.

China has made sure that the survey ship is well-protected. At least four coast guard vessels have escorted it during the survey. The Haijing 37111 and two unidentified CCG ships have accompanied the Haiyang Dizhi 8 since July 3. The 12,000-ton Haijing 3901, one of the world’s largest law enforcement vessels, was also on the scene but only transmitted AIS data on July 6 and 10. At least one known maritime militia vessel, the Qiong Sansha Yu 00114, also joined the escort, transmitting AIS signals from the area on July 13.

Vietnam has responded to the survey by sending its own law enforcement vessels to shadow the Haiyang Dizhi 8. At least two, KN 468 and KN 472, left Cam Ranh Bay and have been following the survey ship since July 4. AIS data shows that the survey ship continues to operate, surrounded by its CCG escort which is boxing out the Vietnamese vessels attempting to intervene.

The situations at both Block 06-01 and around China’s ongoing oil and gas survey are fluid and dangerous. Given the close quarters and provocative behavior on display, there is a clear risk that an accidental collision could lead to escalation. At the same time, pressure is building on both sides to acknowledge and address the issue as more details leak out in public. Vietnam’s National Assembly Chairperson Nguyen Thi Kim Ngan visited China from July 8 to 12, giving both Hanoi and Beijing an incentive to keep a lid on the brewing crisis. But that is changing, with the Ministry of Foreign Affairs in Hanoi issuing its first, admittedly vague, response to questions about the situation on July 16, which reiterated Vietnam’s sovereign rights over its waters and seabed and noted that Vietnamese authorities were exercising those rights.

No matter how these incidents develop, China’s actions off both the Malaysian and Vietnamese coasts since May show that Beijing is increasingly willing to employ coercion and the threat of force to block oil and gas operations by its neighbors, even while pursuing its own energy exploration in disputed waters.

This article was contributed by the Center for Strategic and International Studies (CSIS), a bipartisan, nonprofit organization founded in 1962 and headquartered in Washington, D.C. It seeks to advance global security and prosperity by providing strategic insights and policy solutions to decisionmakers.

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