- The Russian oil giant Rosneft is quietly backing Hanoi in its clash with Beijing.
As heavily armed Vietnamese and Chinese coast guard ships stare each other down in the South China Sea near the submerged Vanguard Bank, Hanoi appears to have found its spine despite threats from its gigantic neighbor. Unlike in the past two years, when Vietnam quietly scrapped a pair of drilling ventures with the Spanish energy firm Repsol under Chinese pressure, Vietnam is currently demanding that China withdraw its survey ship, Haiyang Dizhi 8, and its escorts from the vicinity of the oil and gas blocks. This time, Vietnam has teamed up with an old friend and key shareholder in the drilling: the Russian government.
The facts on the ground have barely changed since the most recent standoffs in 2017 and 2018. All of them occurred within China’s “nine-dash line,” the imprecise self-defined boundary in which Beijing lays claim to almost all of the South China Sea. But the contested fields, all within the 35,000-square-mile, energy-rich Nam Con Son Basin, are also largely within 200 nautical miles of Vietnam’s coastline, the international rule of thumb for determining exclusive economic zones. China is distant—more than 600 miles away—leaving Beijing no real options under the global status quo to claim the Vanguard Bank.
Nonetheless, Vietnam called off drilling in Blocks 136/03 and 07/03, the Vietnamese-licensed drilling concessions that last came under Chinese scrutiny under murky circumstances. While the reasons for the cancellations were never publicly disclosed, reports from Hanoi and within the industry suggested that China had threatened to invade Vietnamese bases in the Spratly Islands, a disputed territory that the two violently fought over in the 1980s. Vietnam, attempting to salvage its security situation amid doubts over the Trump administration’s commitment to the region, went on the retreat. It also did not help that the Philippines, which until recently had been a reliable fellow opponent of the nine-dash line, suddenly expressed ambivalence following the 2016 election of President Rodrigo Duterte.
But last time, the Madrid-based Repsol risked being cut off from its hundreds of millions of dollars in investments and potential revenue. This time, a much tougher partner is involved: Rosneft, whose primary shareholder is the Russian government. Gazprom also operates nearby, as does Zarubezhneft, a wholly Russian state-owned firm founded in 1967 whose local Vietsovpetro joint venture with PetroVietnam is all that is left of the Soviet Union’s once mighty overseas fossil fuel ventures. Where Repsol, a private firm from a minor world power, held little geopolitical clout, Russia can be expected to play old-fashioned great-power politics to defend cash flows to the state.