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Big Oil Enters Game of Thrones

Now that the spat between China and the Philippines has been temporarily resolved, Beijing’s aggressive posture in the oil- and gas-rich waters has exacerbated tensions with Vietnam.

The Financial Times explains the latest showdown:

Vietnam on Wednesday accused China of acting “illegally” after state-owned China National Offshore Oil Corporation (Cnooc) invited foreign companies to tender for exploration rights in an area that Hanoi says infringes on blocks that it has already licensed to America’s ExxonMobil and Russia’s Gazprom.

Do Van Hau, chief executive of PetroVietnam, the state oil company, told reporters that nine exploration blocks put out for tender by Cnooc on Saturday were “located deeply within Vietnam’s continental shelf”.

The government said Cnooc’s actions “seriously violated” Vietnam’s sovereign rights and should be “immediately cancelled”.

Cnooc’s decision would not have occurred without the approval of senior government officials. Moreover, Cnooc had previously tried and failed to win approval for exploration in other geopolitically sensitive areas of the South China Sea. That Cnooc was successful this time around suggests Beijing is tired of Washington and its friends pushing back. It wants to do a little pushing of its own.

If the goal of U.S. rebalancing in Asia was a quiet life in the South China Sea, then that goal is not yet in sight. Competition in the area seems to be getting more intense. The U.S. does not want to be drawn into disputes like these so that for example US and Chinese naval ships are nose to nose in disputed waters, but it also has a considerable stake in maintaining the stability of one of the world’s most important shipping lanes. How Washington calibrates its response to collisions like this will be one of the main challenges of the Obama administration’s Asia policy.


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