WTI Crude

Loading...

Brent Crude

Loading...

Natural Gas

Loading...

Gasoline

Loading...

Heating Oil

Loading...

Rotate device for more commodity prices

Gazprom-Vietnam: All Hands on Deck in South China Sea

A deal struck earlier this month between Russia’s state gas giant, Gazprom, and Vietnam’s state oil and gas group, PetroVietnam, has geopolitical underpinnings aimed at China’s prowess in the South China Sea.

The 6 April Gazprom-PetroVietnam deal grants the Russian gas giant two licenses to explore the Moc Tinh and Hai Thach fields in the South China Sea off the Vietnamese continental shelf and gives Gazprom a 49% stake in the fields, which translates into some 55.6 billion of cubic meters of natural gas for Russia.

While the fields are in Vietnamese waters, the deal comes as China’s ongoing territorial disputes in the South China Sea are heating up and Russia’s presence is not incidental. 

The deal with Vietnam comes only a month after Vladimir Putin was elected to the Russian presidency. Statements by Chinese officials are indicative of their concern and the links they make between the gas venture and wider territorial disputes. “China hoped companies from countries outside the South China Sea region would respect and support efforts by directly concerned parties in resolving disputes through bilateral negotiations,” said Chinese Foreign Ministry spokesman Liu Weimin. 

At the heart of the matter is the South China Sea. Ten days ago China and the Philippines entered into a standoff in the South China Sea, after Chinese surveillance ships intervened to stop a Philippines warship from arresting Chinese fishermen near the disputed Scarborough Shoal area. Today, the standoff continues, with Beijing deploying an advanced fishing patrol vessel to the area. Both sides claim the Scarborough Shoal as an “integral part” of their territory (incidentally, the area has natural gas potential).

There is no dearth of claims on the territory in the South China Sea, from China, the Philippines, and Vietnam to Taiwan, Malaysia and Brunei. Among other aspects of the multilayered territorial disputes, China is holding 21 Vietnamese fishermen, taken into custody in early March for fishing in disputed waters of Hoang Sa (Paracel) Islands.

The South China Sea is of strategic significance to Russia as well. As the US makes its own South China Sea footprint from the Philippines, Russia responds via Vietnam, while China clearly sees the potential for wider confrontation here.

So far, the US has chosen to wait out the China-Philippines standoff. Though Washington signed a Mutual Defense Treaty with Manila, that treaty, officials say, is apparently open to interpretation and it is unclear whether it calls for the US to come to the Philippines’ aid to protect a claim on territory in the South China Sea, even in the event of an open conflict in the area.

In the meantime, over the past couple of decades, Russia has taken pains to rebuild its Soviet-era relations with Vietnam. Those efforts have included an $8 billion loan for the construction of the country’s first nuclear power plant. Moreover, Russia’s advanced weapons technology exports to Vietnam include a checklist that makes China uncomfortable as they have helped the country build up impressive defense capabilities should anything go awry in the South China Sea.

Beyond that, Russia has apparently pledged to build a submarine base and a shipyard in Vietnam. The final push would be Vietnam’s eventual agreement to allow Russia to reopen its Soviet-era military base on its territory. In short, Russia has rendered Vietnam less vulnerable to Chinese aggression, and the latest gas deal which establishes a footprint in the disputed South China Sea is a bulwark that Beijing does not appreciate.  

The US has also made some gains in Vietnam. On Tuesday, the two countries announced they would conduct five days of "non-combatant" naval exchange activities next week in the port city of Danang, meant to “underscore the closer ties between the US and Vietnam”. It is a clear message to China amid its standoff with the Philippines. The announcement comes as the US and the Philippines are four days in to similar naval war games scheduled to last for two weeks.   

By Jen Alic of Oilprice.com

Jen Alic is a geopolitical analyst, co-founder of ISA Intel in Sarajevo and Tel Aviv, and the former editor-in-chief of ISN Security Watch in Zurich.




Back to homepage


Leave a comment
  • eyedrd on April 20 2012 said:
    Now the truth has just come out. WikiLeaks cable: Chinese officials admitted China can’t prove Spratlys claim
    http://www.eyedrd.org/2012/04/wikileaks-cable-chinese-officials-admitted-china-cant-prove-spratlys-claim.html
    International should not make the same mistake like it did with Hitler by submitting to Hitler’s dictak and Munich. Nobody can satisfy to the insatiable greed or hunger of the most populous and totalitarian country.
  • Tin on April 20 2012 said:
    South East Asian countries need to build an military alliance like the form of NATO to fight off the Chinese. Let them in and shoot them down from all directions. I don't understand these sleepy Asian countries at all. The enemy is declaring war by claiming their territories and yet, they all sit back and think, the US will take care of their problems and life goes on as usual. So far Vietnam is the only capable army can lead them out of trouble and I think, they need to act fast, not just sitting there at the meetings and try to understand the ASEAN summit translation documents.
  • Temujin on April 20 2012 said:
    China was form by war aggresion from the Qin to Mao dynasty. First, they claimed Tibet, Xingjiang, and Taiwain as their territories. Now, they claims West Philippines Sea and Yellow Sea as their territories. Next they will claim Australia, Russia Siberia, and half of the Pacific Ocean as their real estate properties. These shrewd and very greedy chinese are threat not only to Asia, but to mankind as we know it.
  • Tata on May 21 2012 said:
    China's dreams is a nightmare that should never become a reality. It is a power that must never be unleashed. The Philippines must have its Plan B and C in order to counter this egoistic country. The US must help so it can also protect its interest in the southeast. The action should be gradual but sure. Annihilation of communist China should be done soon.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News