Oil Company Pulls Out of Vietnamese Oil Field as China Puts the Squeeze on Vietnam

By Drake Long
oil-vangurd.jpg Satellite imagery shows what looks to be the China Coastguard ship 5402 (inset right), 21 nautical miles from the Lan Tay oil platform (inset left) in this composite of two photos off the coast of Vietnam, July 6, 2020. The 5402 is still patrolling Vanguard Bank.
Planet Labs Inc.

Vietnam has cancelled its contract with an oil rig originally meant to begin exploring at an oil field near Vanguard Bank, off Vietnam’s southeastern coast, the owner of the rig has confirmed.

The cancellation comes as China exerts pressure on Southeast Asian nations that want to exploit resources in the South China with international partners.

In the latest exhibition of that pressure, a China Coast Guard vessel is patrolling near another Vietnamese oil rig already in the area. It is being monitored by several Vietnamese coastguard ships, in what has the makings of another maritime standoff between the two powers.

The Noble Clyde Boudreaux, an oil rig contracted by Vietnam to drill in the contentious oil block 06-01, had its contract with Vietnam canceled according to a fleet status report uploaded to the Noble Corporation’s website. Its parent company received an undisclosed sum as compensation.

The Clyde Boudreaux had been sitting idle in the Vietnamese port at Vung Tau for more than two months. It was previously scheduled to start working at the beginning of June. Its updated status says it will commence work on a new, unspecified contract with Vietnam in mid-July.

“Previously disclosed contract in Vietnam has been cancelled. Contract includes a termination payment,” the status report says.

Vietnam has frequently come under pressure from China to cease oil exploration off its southern coast, in waters China unlawfully claims on the basis of “historic rights.” China maintains that any resource exploration in the South China Sea must be done with Chinese partners, and not international companies, and has had some success in making Vietnam back down from joint exploration even in waters within Vietnam’s jurisdiction. Spanish company Repsol gave up its shares in three Vietnamese oil blocks on June 12, three years after its original contract with Vietnam was canceled due to Chinese pressure.

There is no stated reason for the cancellation of the Clyde Boudreaux’s contract, but it comes at a time when China has stepped up its intrusions into Vietnamese waters, sending a survey vessel within 200 nautical miles of Vietnam’s coast on June 17 and more recently sending the China Coast Guard (CCG) vessel 5402 to the Vanguard Bank, a submerged feature in the Spratly chain of rocks and reefs in the southern part of the South China Sea. China and Vietnam were engaged in a months-long standoff at the bank last year.

Vessel tracking data shows the 5402 remained at Vanguard Bank as of Monday morning, and several vessels with Vietnam’s Fisheries Resources Surveillance, a maritime law enforcement agency analogous to a coastguard, were surrounding it.

The 5402 appears to be making passes by an oil rig currently operated by Russian energy company Rosneft. The Lan Tay platform has been working in block 06.01 since 2018, and on July 6 a ship similar to the 5402 was visible in satellite imagery passing within 21 nautical miles of it.

Malaysia has come under similar pressure from China this year. Between mid-April and mid-May, a Chinese survey vessel and escort ships spent a month operating in the vicinity of a Malaysian-contracted drillship inside Malaysian exclusive economic zone, until the drillship departed.

On Monday, U.S. Secretary of State Mike Pompeo issued a tough statement declaring illegal sweeping Chinese territorial claims in the South China Sea that stretch far from its own mainland.

“The world will not allow Beijing to treat the South China Sea as its maritime empire,” Pompeo said. “America stands with our Southeast Asian allies and partners in protecting their sovereign rights to offshore resources, consistent with their rights and obligations under international law.”


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