Vietnam's Capitulation

Drilling ship leaves Vietnam oil block after China row
By Matthew Tostevin

HANOI -- The drilling ship at the center of a row between Vietnam and China over oil prospecting in disputed waters in the South China Sea has arrived in waters off the Malaysian port of Labuan, shipping data in Thomson Reuters Eikon showed on Monday.
Drilling by the Deepsea Metro I ship was suspended in Vietnam's Block 136/3 last month after pressure from China, which says the concession operated by Spain's Repsol overlaps the vast majority of the waterway that it claims as its own.
The ship, used by Norway's Odfjell Drilling Ltd., was reported to be in Labuan at 9.17 a.m. (0117 GMT), according to shipping data in Thomson Reuters Eikon. 

It was last recorded at the drilling site on July 30.
Odfjell Drilling did not respond immediately to a request for comment.
The row over the drilling inflamed tensions between Vietnam and China, whose claims in the South China Sea are disputed by five Southeast Asian countries.
Repsol said last month that drilling had been suspended after the company spent $27 million on the well. 

Co-owners of the block are Vietnam's state oil firm and Mubadala Development Co of the United Arab Emirates.
The block lies inside the U-shaped "nine-dash line" that marks the area that China claims in the sea.
China had urged a halt to the exploration work and a diplomatic source with direct knowledge of the situation said that the decision to suspend drilling was taken after a Vietnamese delegation visited Beijing.
Vietnam has never confirmed that drilling started or that it was suspended, but last month defended its right to explore in the area.
Vietnam has emerged as the most vocal opponent of Chinese claims in the South China Sea, where more than $3 trillion in cargo passes every year, and China was also angered by Vietnam's stand at a regional meeting last week.
Vietnam held out for language that noted concern about island-building and criticized militarization in South China Sea in the communique from foreign ministers of the Association of South East Asian Nations (ASEAN).

Chinese Aggressions

Vietnam renews India oil deal in tense South China Sea
By Mai Nguyen, Nidhi Verma and Sanjeev Miglani | HANOI/NEW DELHI

Vietnam has extended an Indian oil concession in the South China Sea and begun drilling in another area it disputes with China in moves that could heighten tensions over who owns what in the vital maritime region.
The moves come at a delicate time in Beijing's relations with Vietnam, which claims parts of the sea, and India, which recently sent warships to monitor the Malacca Straits, through which most of China's energy supplies and trade passes.
Vietnam granted Indian oil firm ONGC Videsh a two-year extension to explore oil block 128 in a letter that arrived earlier this week, the state-run company's managing director Narendra K. Verma told Reuters.
Part of that block is in the U-shaped 'nine-dash line' which marks the vast area that China claims in the sea, a route for more than $5 trillion in trade each year in which the Philippines, Brunei and Malaysia also have claims.
A senior official of ONGC Videsh, who asked not to be named because of the sensitivity of the matter, said interest in the block was strategic rather than commercial, given that oil development there was seen as high-risk with only moderate potential.
"Vietnam also wants us to be there because of China's interventions in the South China Sea," the official said.
Vietnam's state-run PetroVietnam declined to comment on the concession, which was first granted to India in 2006 but had been due to expire in mid-June.
Conflicting territorial claims over the sea stretch back many decades but have intensified in recent years as China and its rivals have reinforced their positions on the rocks and reefs they hold.
Far to the south of block 128, drilling has begun in a block owned jointly by Vietnam's state oil firm, Spain's Repsol and Mubadala Development Co of the United Arab Emirates.
Deepsea Metro I, operated by Odfjell Drilling Ltd., has been drilling in the region since the middle of last month on behalf of Spain's Repsol SA, which also has rights to neighboring block 07/03, Odfjell said.
Odfjell declined to comment on the specific location of its vessel, but shipping data from Thomson Reuters Eikon showed it was in oil block 136/3, which also overlaps China's claims.
Odfjell's Eirik Knudsen, V‎ice President for Corporate Finance and Investor Relations, referred further queries to Repsol, which declined to comment. 

PetroVietnam made no comment.

COMPETING MARITIME CLAIMS
When asked about the activity, Chinese foreign ministry spokesman Geng Shuang said China opposes anyone "carrying out unilateral, illegal oil and gas activities in waters China has jurisdiction over".

Chinese General Fan Changlong cut short a visit to Vietnam and a friendship meeting at the China-Vietnam border was canceled around the time the drilling began.
The centuries-old mistrust between China and Vietnam is nowhere more evident than in their competing maritime claims, despite their shared communist ideology and growing trade.
Asked about the most recent drilling, Vietnamese officials said their Chinese counterparts have started raising concerns about cooperation with both Repsol and ExxonMobil Corp. of the United States, which is developing the $10 billion "Blue Whale" gas concession off central Vietnam.
They said Chinese officials also expressed concern at Vietnam's evolving security relationships with the United States and Japan, both of which have offered moral support for its South China Sea claims and help for Vietnam's coastguard.
Tensions with China were being contained, however, and had not yet reached crisis proportions, they said.
"We know they are unhappy again, but we are resisting the pressure – it is a traditional part of our relations with Beijing," one official said privately. 

"Other parts of the relationship remain strong."
Underlining the relationship between India and Vietnam, Vietnamese deputy prime minister Pham Binh Minh told a forum in New Delhi this week that India was welcome to play a bigger role in Southeast Asia -- and specifically the South China Sea.
Hanoi's growing defense and commercial ties with India are part of its strategy of seeking many partnerships with big powers while avoiding formal military alliances.
The pace has picked up since Indian Prime Minister Narendra Modi's administration took office in 2014 and sought to push back against China's expanding presence in South Asia by raising its diplomatic and military engagement in Southeast Asia.
India is providing naval patrol boats, satellite cover to monitor Vietnam's waters and training for its submarines and fighter pilots -- more military support than it is giving to any other Southeast Asian country.
On the agenda are transfers of naval vessels and missiles under a $500 million defense credit line announced last year.
Next week, the navies of India, the United States and Japan will hold their largest joint exercises in the Bay of Bengal.