Wednesday, July 26, 2017

Why Did Vietnam Suspend Oil

Background Briefing:
Why Did Vietnam Suspend Oil
Drilling in Block 136-03?
Carlyle A. Thayer
July 25 , 2017
We request your assessment of Vietnam's recent cancellation of oil drilling in the
South China Sea.
Q1- Were you surprised when Vietnam backied down so quickly?
ANSWER: What surprised me was that China threatened to use force against
Vietnamese bases in the South China Sea if oil drilling continued without, it would
appear, any forewarning. I had assumed China would engineer some indirect use of
intimidation to signal Vietnam first.
Q2- So far all resports on this development come from the BBC's Bill Hayton. Did you
have an independent source about Vietnam directing Talisman-Vietnam to suspend
oil drilling in block 136-03?
ANSWER: I was told on 15 July that Vietnam has asked Repsol to halt its oil drilling
activities in block 136-03. This was reported a Thayer Consultancy Background Brief
issued the same day. The BBC cited industry sources while my source was a trusted
Vietnamese working in Hanoi.
Q3- Is it possible that Vietnam did this because of China's threats to attack
Vietnamese bases in Spratly Islands?
ANSWER: What we do not know is whether General Fan Changlong delivered a
threat during his visit to Hanoi or whether the threat was delivered after his
departure. If the BBC sources are correct Vietnam would have been prudent to
suspend drilling before deciding on what action to take next. It is now being claimed
that China delivered its threat to the Vietnamese Ambassador in Beijing. The threat
was considered by the Politburo on July 14 and they agreed to stop drilling. There is
currently some uncertainty over whether China actually threatened force.
Q4- What does China's move tell you about its behavior?
ANSWER: China’s reported threat to Vietnam forms part of a pattern of increased
bellicosity from China. President Rodrigo Duterte from the Philippines has spoken
openly in May, before China’s current threat to Vietnam was made, that Xi Jinping
threatened to “go to war” if the Philippines resumed oil exploration and drilling in
Recto Bank. The recent Chinese Air Force intercept of U.S. Air Force WC-135
Constant Phoenix aircraft over the East Sea is the most recent example of China
Thayer Consultancy
ABN # 65 648 097 123
intercepting U.S. flights over the East and South China Seas. China is currently
conducting naval exercises in the Baltic with the Russian Navy.
Q5- What would happen if Vietnam continued drilling for oil with Repsol?
ANSWER: China undoubtedly would interfere. China has many options: it might
attempt to cut the cable of the oil drilling vessel, it could deploy fishing boats with
embedded maritime militia, China Coast Guard vessels or even People’s Liberation
Army Navy warships to stop drilling in Block 136-03. Additionally, China could cut off
Vietnamese supply vessels. And at the extreme end of the spectrum, China could fire
warning shots at the exploration vessel or, as threatened, take some form of limited
military action against one of features that Vietnam occupies. The maritime area
around Vanguard Bank hosts fifteen technical support services platforms built on
stilts that are highly vulnerable.
Q6- Was Vietnam trying to avoid confrontation with China or there are any other
reasons behind this in your view?
ANSWER: Vietnam always uses both diplomacy and a demonstration of resolve in
responding to Chinese actions. From the facts available, it would appear that
Vietnam responded to an unprecedented threat to use force by China by standing
down in order to buy time to map out a strategy. At the moment, the Vietnamese
press has been silent and the Foreign Ministry unusually quiet. Vietnam does not
want to precipitate an incident in which it comes off second best. Vietnam will need
time to mobilize international opinion and seek support from Japan, the United
States, India, Australia and Europe. Vietnam must also meet with representatives of
foreign oil companies presently operating in Vietnam’s Exclusive Economic Zone to
share assessments. And, finally, Vietnam will have to press China through diplomatic
and other channels to resolve the matter peacefullyl
Suggested citation: Carlyle A. Thayer, “Why Did Vietnam Suspend Oil Drilling in Block
136-03?” Thayer Consultancy Background Brief, July 25, 2017. All background briefs
are posted on (search for Thayer). To remove yourself from the mailing
list type, UNSUBSCRIBE in the Subject heading and hit the Reply key.
Thayer Consultancy provides political analysis of current regional security issues and
other research support to selected clients. Thayer Consultancy was officially
registered as a small business in Australia in 2002.

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