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Page added on May 28, 2014

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China’s Massive Disputed Oil Rig Near Vietnam Is Now Drilling

China’s Massive Disputed Oil Rig Near Vietnam Is Now Drilling thumbnail

A giant Chinese oil rig has finished its first round of drilling in South China Sea waters also claimed by Vietnam and moved to another site in the area, the rig’s operator, China Oilfield Services Ltd (COSL), said on Tuesday.

In a statement, COSL said exploration would still take place off the Xisha islands, China’s name for the disputed Paracel chain, suggesting the rig was not moving far.

In early May, the rig was deployed between the Paracel islands and the Vietnamese coast, sparking deadly anti-China riots in Vietnam and protests from the government in Hanoi.

The rig had “smoothly” completed the first phase of its work said COSL, the oil service arm of state-run China National Offshore Oil Company (CNOOC) Group, which owns the $1 billion platform.

COSL said it had obtained relevant geological data from the drilling, but did not give details or specify the current location of the rig.

Neither officials from COSL nor CNOOC Group could be reached for comment.

In line with previous statements, COSL said drilling was on track to be completed by mid-August.

Vietnam has said the rig is in its 200-nautical mile exclusive economic zone and on its continental shelf. China – which claims almost the entire South China Sea – says the rig is operating within its waters.

Business Insider


16 Comments on "China’s Massive Disputed Oil Rig Near Vietnam Is Now Drilling"

  1. rockman on Wed, 28th May 2014 7:41 pm 

    Very minor glitch: “…the $1 billion platform.” Not a platform per se but a mobile drilling unit we call a semi-submersible. And typically even if the well finds a big commercial reservoir it is often plugged and abandoned. We call them expendable holes. Later a fixed or floating platform is set and producible wells are drilled from it.

  2. Makati1 on Wed, 28th May 2014 8:04 pm 

    Testing the sites for maximum production, before the negotiations? Or just seeing how far the US will back up it’s words with physical support? “O” tells a great story than goes and plays golf. Promises are cheap, but we all know that the US is NOT going to start a war over oil. Or do we? Interesting times.

  3. Shaved Monkey on Wed, 28th May 2014 10:19 pm 

    So the Vietnam war was about oil too.

  4. rockman on Wed, 28th May 2014 11:00 pm 

    Actually if you believe some historians the war started by the French was over commodities: rubber and I think copper.

    M – Pretty much SOP in Deep Water exploration: drill a number of expendable holes before risking $billions on production facilities and development wells. Or, in this case, risking a military confrontation…no point in fighting and killing over a dry hole.

  5. Girish on Thu, 29th May 2014 12:30 am 

    From the looks of it, seems Vietnam rightfully should have sovereignty over the oil-site !

  6. agramante on Thu, 29th May 2014 1:37 am 

    China is party to UNCLOS (i.e. the Law of the Sea), which is pretty explicit about exclusive economic zones (200 nm from baseline, with adjacent states to negotiate overlaps or submit to arbitration). Historical claims of the type China is making over all of those islands are considered invalid. Of course, big nations are in the habit of selectively breaking treaties, and it’s not like the US, which isn’t a party, can or will press any such issue.

  7. Tomgood on Thu, 29th May 2014 3:57 am 

    As I’ve said for several years now, the 21st century’s wars will be fought over energy. China has been picking a lot of fights in the region lately, and the areas in dispute are all rich in resources. How long before one of the opposing countries decides to fight back?

  8. Makati1 on Thu, 29th May 2014 5:36 am 

    Tomgood, none of the affected countries can fight back and hope to win. That is why it is all words … for now. Even Japan knows it cannot go up against the Chinese. Their economies are still too integrated and Japan is a failing country anyway and cannot afford a war. None of the Western countries can. That is why a nuclear exchange up front is most likely. Their only hope is to fatally wound their opponent before he can retaliate.

  9. Davy, Hermann, MO on Thu, 29th May 2014 7:03 am 

    OH Mak, your such a lush. Come on Mak, China cannot take on that whole region. They do not have the “Blue Ocean” navy. They do not have the political capital to get away with it and not have their export markets damaged. Then there is the US which will protect its treaty members Taiwan and Japan. The US can wipe China’s small navy off the map. China is pushing this issue but it will back off at some point for selfish interest. China has a dying economy and a deteriorating social fabric it cannot afford foreign territorial conquest adventures. China is now showing what a greedy and self-interested country it is with no concern for its neighbors or international law. It is a country in overshoot and will now attempt to spread its greedy fingers like a cancer into its neighbors. China will soon be too poor for these foreign adventures as its debt spiral brings down its Ponzi financial system.

  10. Juan Pueblo on Thu, 29th May 2014 8:21 am 

    China was the largest economy of the world for 18 of the last 20 centuries. They will attempt to become a regional power again and they will most likely fail, and fall along with the rest of us as we all collapse together as the world resources and sinks are exhausted.

  11. paulo1 on Thu, 29th May 2014 8:56 am 

    All it takes is one little boat with an rpg to stop the drilling and/or scare off the drillers. The Chinese navy can sweep the area but determined numbers of very few people can stop superpowers in their tracks, and have done so for a long time.

    Paulo

  12. Juan Pueblo on Thu, 29th May 2014 9:35 am 

    Paulo, the drill is constantly sorrounded by a fleet of Chinese ships, close to 100, both military and civilians. It is almost 200 miles offshore. It would be hard to penetrate without a military attack and pointless. The Chinese would send two or three drills with 1000 ships, subs, planes, helicopters, and start building a military base on the islands. and orders to shoot to kill. The Chinese will not back down unless made to, and Vietnam can’t make them. This is not about the oil exclusively. For the Chinese this is mostly territorial and strategic, like Ukraine for Russia. They are willing to pay a price, they understand this will have a cost and have decided to proceed forward anyway.

  13. Fulton J. Waterloo on Thu, 29th May 2014 11:46 am 

    If push came to shove, the Japanese Navy could DESTROY the Chinese fleet

  14. Cathy Yang on Thu, 29th May 2014 2:54 pm 

    If anyone believes that the Chinese had a smooth drilling and finished its 1st round, I have some rare Sahara sand at a discount of US$100/lb for you. The area has been well explored by Vietnam and foreign partners, results submitted to UN over 10 years ago – some gas but oil is economically, not feasible. Further south, in and around the Spratly’s are where to drill and China’s cow tongue licks all over EEZ’s of Brunei, Malaysia, Indonesia and the Philippines. If the world watches and decides it’s only Vietnam, not worth some excitement – 1 of the 2 things will happen:
    1. This rig will explode, regardless of 100 ships protection zone – a couple of speedboats can deliver result. Low cost, low tech and asymmetric warfare is what Vietnamese specializes in.
    2. Vietnam takes a pass and it’s the Filipino’s turn. Some complication with the mutual treaty and a forewarning for Malaysia.
    As a betting enthusiast, I pick #1 for when it comes to China, Vietnamese DNA seldom fail to act.

  15. GregT on Thu, 29th May 2014 7:16 pm 

    “For the Chinese this is mostly territorial and strategic, like Ukraine for Russia.”

    So kinda like Mexico for the US?

  16. GregT on Thu, 29th May 2014 7:26 pm 

    ” the Japanese Navy could DESTROY the Chinese fleet”

    Yes, but if they did, there would a largish crater in the ocean where Japan once was.

    The days of naval significance ended long ago. That would be like threatening your neighbour with a rock, when he has a rocket propelled grenade pointed at your house.

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