Due to territorial disputes, energy exploration in the South China Sea has been a key source of conflict between China and the claimant states in the region. Beijing has worked to limit or block other states from pursuing drilling and exploration projects in areas it considers disputed. Some countries, such as the Philippines, have responded amiably by choosing to work with Beijing. But others, such as Vietnam, have decided to double down on their energy partnerships with other countries.
Chinese and Vietnamese coast guard vessels have reportedly been engaged in a weeklong confrontation around Vanguard Bank in the southern region of the South China Sea. The standoff was allegedly sparked when the Chinese survey ship Haiyang Dizhi 8 entered the area on July 3 to carry out a mapping mission. The ship was escorted by several Chinese coast guard vessels and maritime militia ships, as well as dozens of merchant marine vessels. Some of these merchant vessels are believed to belong to some of its state-owned energy giants, including the China National Petroleum Corp. (CNPC) and the China National Offshore Oil Corp. (CNOOC).
Meanwhile, Chinese coast guard vessels were recently spotted near Vietnam's Block 06.1 off the Vanguard Bank, which is where Japan's Hakuryu 5 oil rig had started drilling operations on May 12 under a contract with the Rosneft Vietnam B.V. After the reports, Vietnam's Foreign Ministry said the country will resolutely "fight violations" in its sea areas on July 16.
Why It Matters
The situation remains unclear given the sparsity of details. That said, the energy-rich Vanguard Bank has frequently been at the heart of Vietnam and China's long-standing maritime tensions, with Beijing trying to limit or block Hanoi from exploring in what it considers disputed territory. In this, China has reportedly gone so far as to threaten attacks on Vietnamese outposts in the area, which is likely what caused Hanoi to halt the two exploration projects that it had partnered with Spanish firm Repsol to conduct in the area in 2017 and 2018.
Neither Beijing nor Hanoi has confirmed the confrontation, which reflects some level of political restraint on both sides. But there's still a significant chance for escalation, should both countries refuse to withdraw their forces from the area or engage in more dangerous actions, such as shooting at or ramming each other's vessels.
Chinese and Vietnamese vessels have reportedly faced off again in the South China Sea, ending a five-year spell of relative peace in the energy-rich region.
However, the fact that Vietnam keeps pursuing energy partnerships with foreign firms in disputed areas also indicates that Hanoi is willing to risk China's threats. Vietnam's Block 06.1 sits within the area outlined by China's nine-dash line — making the new Japenese-led drilling operation there a likely target of harassment by Beijing's maritime militia. Japan has been an eager player in stemming China's growing presence in the South China Sea, as well as Beijing's increasingly cozy relationship with Russia. Thus, this likely factored into Vietnam's decision to allow Tokyo to pursue the desired exploration in the disputed area.
But perhaps most notable is the fact that this latest incident is the biggest maritime clash between Vietnam and China since 2014, when Beijing deployed an oil rig near the disputed Paracel Islands. The 2014 conflict significantly damaged their relations and sparked nationalist protests in Vietnam. This fallout is, in fact, the reason why Hanoi's policies have favored more stable relations with Beijing over the past five years. Vietnam has since been careful to pursue its maritime interests more discreetly and its security partnership more delicately. But the recent flare-up in tensions could encourage — or even force — Hanoi to resort to a more directly confrontational approach to China.
And the Foreign Ministry's statement may indicate that Vietnam may already be shifting toward a more hard-line approach. From a political standpoint, neither Beijing nor Hanoi wants to see their relations sour. But space for de-escalation will continue to narrow until one of the two countries decides to take a step back.