By Andy Tully

Beijing may be stirring up new resentment among nations bordering the South China Sea by moving an oil rig back to an area of the coast of Vietnam.

China’s Maritime Safety Administration said the rig, the $1 billion Hiyang Sgiyou 981, would conduct “ocean drilling operations” in search of oil and gas from June 25 to Aug. 20, about 75 nautical miles south of Sanya, a resort city on the Chinese island province of Hainan, according to Reuters. That site also is about 100 nautical miles east of Vietnam’s coast.

Beijing urged all vessels traveling in the area to stay at least 2,000 meters away to ensure their own safety and that of those working on the rig.

Under the 1982 United Nations Convention on the Law of the Sea, Vietnam’s maritime exclusive economic zone (EEZ) in the region extends fully 200 miles from its coast. China has a self-declared EEZ called the “nine-dash line,” not recognized by the U.N., which overlaps with Vietnam’s EEZ.

In fact, Beijing claims most of the South China Sea, which is believed to be rich in oil and gas reserves and already is a route for $5 trillion in seaborne trade annually. Beijing’s EEZ, meanwhile, also conflicts with U.N.-backed territorial claims by Brunei, Malaysia, the Philippines and Taiwan.

The Chinese rig will operate in that general overlapping area, as it did more than a year ago. On May 1, 2014, the rig began exploratory drilling in the area, rousing resentment in Vietnam, which has long accused China of bullying its smaller neighbor.

China’s move led to deadly protests in Vietnam, the most violent the country had seen in years and the worst breach in relations between the two countries since they fought a brief border war in 1979.

But on July 16 2014, China began to move it away. Beijing said the reason was to protect the structure from the approaching Typhoon Rammasun, but a leading Vietnamese military officer, Maj. Gen. Le Ma Luong, said that was “just an excuse” and that China was backing down because of his country’s “strong reactions” to its presence.

At the time, the China National Petroleum Corp., which operates the rig, said it was suspending its work because it had found “signs of oil and gas” in its exploratory drilling and would conduct follow up assessment of the results.

The location of the rig this year is not as close to Vietnam’s coast as it was last year. It is now closer to Hainan Island than it was a year ago, and therefore Beijing might argue that it is within Hainan’s EEZ.

In 2014 it was operating farther south near the Paracel Islands, which both China and Vietnam claim as their territory.

Nevertheless, there has been increasing concern in Southeast Asia about China’s accelerated activity in the South China Sea. Beijing has been reclaiming land in the region, transforming reefs and other small land masses into both civilian and military bases of operations. It also has increased its military exercises in the area.

By Andy Tully of Oilprice.com

http://finance.yahoo.com/news/chinese-oil-rig-returns-vietnam-210232426.html

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