Vietnam has called off a drilling expedition in the South China Sea after reported pressure from Beijing, the BBC reports, citing an unnamed industry source. The source said that the company that was drilling in the Block 136-03, a unit of Spain’s Repsol, has been asked to stop drilling. The report has been confirmed by a diplomatic source in Vietnam, the BBC added.
Oilprice reported at the start of this month that Vietnam had allowed a drillship Deepsea Metro I to start drilling in the Block 163-03 about 250 miles off the Vietnamese coast. The problem with the block is not just that it is in disputed waters. China, which calls it Wan-an Bei 21, had already leased the block to another driller, Brightoil – a Hong Kong company with close ties to Beijing. Recently, however, the company denied having the drilling rights to Wan-an Bei 21, the BBC notes.
The report about the start of drilling came soon after a week earlier, a senior Chinese military official cut short a visit to Vietnam. Fan Changlong, vice-chairman of China’s Central Military Commission, was visiting Vietnam for a “defense border meeting,” as China’s Xinhua agency reported at the time, but left early because of “working arrangements."
The true reason for the departure, the BBC suggested at the time, may have been news about what Deepsea Metro I is doing in the disputed area.
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China has territorial claims to about 90 percent of the South China Sea, which has put it at odds with its neighbors. Last year, the Philippines won a court case against Beijing regarding its territorial claims but China said at the time that it would ignore the decision of the Hague-based Permanent Court of Arbitration.
The South China Sea may hold 28 billion barrels of oil, according to an estimate from the U.S. Geological Survey from the mid-90s. With technology improvements, this figure could have since increased substantially. Vietnam has welcomed several foreign companies into its oil and gas industry, including Rosneft and Gazprom, as well as Exxon.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.