On July 15, well-informed sources in Hanoi privately reported that Vietnam directed a subsidiary of Spain’s Repsol to suspend oil drilling in block 136-03 in the South China Sea. Nine days later a report by the BBC’s Bill Hayton finally confirmed this.
According to the BBC, Vietnam informed Repsol executives last week that “China had threatened to attack Vietnamese bases in the Spratly Islands if the drilling did not stop.” Vietnamese government officials directed Repsol to leave the area.
While there has been some dispute among observers about the commercial viability of block 136-03, the BBC reported that Repsol confirmed the discovery of a major gas field only a few days ago.Enjoying this article? Click here to subscribe for full access. Just $5 a month.
For the past two and a half years Vietnam has moved cautiously in its oil exploration activities in the South China Sea following the HD 981 crisis in mid-2014. Early this year there was a marked change. Vietnam signed its largest gas exploration contract with ExxonMobil to develop the Blue Whale project and Vietnam lifted restrictions on exploration in block 136-03.
The ExxonMobil deal was given much publicity, while the go ahead to Repsol was kept under wraps.
Vietnam’s actions aroused China’s ire. General Fan Changlong, deputy chair of the Central Military Commission, visited Madrid in June and raised Repsol’s drilling activities according to private reports. Then General Fan flew to Hanoi to discuss plans for the fourth friendly border exchange activities. In his meeting with Vietnam’s top leadership General Fan requested a halt to oil and gas exploration. He stated both sides should “abide by the important consensus reached by the leaders of the two countries and the two parties.”
Vietnam’s leaders reportedly pushed back and defended Vietnam’s right to sovereign jurisdiction in their Exclusive Economic Zone. This angered General Fan, who cancelled China’s participation in the border exchange activities and abruptly left the country.
The BBC report that China threatened to attack Vietnamese-occupied features in the South China Sea if the drilling did not stop is an alarming escalation of Chinese assertiveness and forms part of an emerging pattern of increased Chinese bellicosity.
On 19 May, for example, Reuters reported the following conversation between presidents Rodrigo Duterte and Xi Jinping in Beijing four days earlier:
“We intend to drill oil there, if it’s yours, well, that’s your view, but my view is, I can drill the oil, if there is some inside the bowels of the earth because it is ours,” Duterte said in a speech, recalling his conversation with Xi.
“His response to me, ‘we’re friends, we don’t want to quarrel with you, we want to maintain the presence of warm relationship, but if you force the issue, we’ll go to war.'”
In July, China publicly protested when Vietnam extended India’s ONGC’s lease in Block 128 in the South China Sea.
China’s threat to use force against the Philippines and Vietnam has major ramifications for energy security in these two countries. Both need to develop hydrocarbons to meet growing domestic energy demand.
China’s threat to use force also raises the risks for foreign oil companies currently operating in the South China Sea. If they cannot count on the host country to provide protection, they are likely to cut bait and run because of the increased risks.
China’s threat raises a nightmare scenario in particular for Vietnam’s leaders because it would be a test of its policy of cooperation and struggle with China. Vietnam’s leaders will quickly come to learn that giving in to China on one point will lead China to press on another.
Any attack on a Vietnamese-occupied feature in the South China Sea would result in a massive eruption of anti-Chinese sentiment in Vietnam. This could seriously undermine the political authority of the current regime and an anti-China leadership would result in a prolonged estrangement in bilateral relations.
In the midst of the HD 981 crisis in 2014, for example, 61 retired senior Vietnamese officials called on their leadership to take legal action against China, to exit China’s orbit (thoat Trung), and to abandon the policy of three nos (no foreign alliances, no foreign bases, and no use of Vietnam to harm the interests of a third country).
Any Chinese attack on Vietnam would set off alarm bells all over the region. Regional states would split between those willing to accommodate to China and those who would seek the support of external powers to maintain the balance of power.
The Association of Southeast Asian Nations (ASEAN) would find it difficult to mount more than a diplomatic response calling on the parties concerned to settle the dispute peacefully. Capitulationists like Duterte could seriously impair ASEAN consensus. One of the first casualties would be the Code of Conduct in the South China Sea.
The U.S. could have its hand forced if China threatened ExxonMobil. When Prime Minister Nguyen Xuan Phuc met President Donald Trump at the White House on 31 May, they issued a joint statement that included a long paragraph on the South China Sea that said in part:
The two leaders underscored the importance of freedom of navigation and overflight and other lawful uses of the seas, and noted with concern the destabilizing impacts that unlawful restrictions to the freedom of the seas have on peace and prosperity in the Asia–Pacific region. The two sides also affirmed full support for the peaceful resolution of disputes without the threat or use of force or coercion, in accordance with international law… President Trump stressed that the United States will continue to fly, sail, and operate anywhere international law allows.
Any Chinese attack on Vietnam would be like throwing down the gauntlet to the United States, Japan, and other maritime powers. They would face some tough questions: do they really protect Vietnam’s oil industry at the cost of going to war with China over a few little rocks in the South China Sea?
China’s threat to use force against Vietnam will accelerate the ongoing strategic debate in the United States and other allied capitals about how to halt if not reverse China’s continued militarization of the South China Sea.