China’s Foreign Ministry announced on Thursday that it retains the exclusive right of refusal over all oil and gas exploration and mining in the South China Sea.
Chinese Foreign Ministry spokesman Lu Kang told reporters at a press conference that he called on “relevant parties to seriously respect China’s sovereign and jurisdictional rights and do nothing that could affect bilateral relations or peace and stability of this region.”
The “relevant parts” in this case are other countries that also claim parts of the South China Sea, particularly islands close to oil and gas reserves. Vietnam, the Philippines, Malaysia, Brunei and Taiwan all have claims on the sea.
The statement comes after Rosneft Vietnam BV, a unit of Russian state oil company Rosneft, announced on its website on May 15th that it has begun drilling a production well off the coast of Vietnam at the Lan Do gas field. It is believed that Lan Do has 23 billion cubic meters of natural gas and Rosneft plans to drill a second well before the end of the year.
The problem is that the neighboring Lan Do and Lan Dai gas fields are located in the strategic waterway area claimed by the People’s Republic of China and the Socialist Republic of Vietnam.
The dispute over who controls the waterway has “lasted for centuries”, as Singapore’s Defense Minister Ng Eng Hen said in February, but the situation has become more tense in recent years, especially between the two socialist countries. Last June, high-level talks between Beijing and Hanoi were canceled after a contentious closed-door meeting on the territorial dispute.
In the following month, Beijing even threatened to attack Vietnamese bases on the Spratly Islands if Talisman-Vietnam, a subsidiary of the Spanish oil company Reposol, was allowed to continue developing in controversial waters. The region that Rosneft is developing is very close to the area where Reposol was last year, about 400 km southeast of Ho Chi Minh.
This means that China and Russia must work together with Reposol, Rosneft, and with regional players to find a win-win solution to this question. A failure to resolve this, will result in an increasing rift that could well threaten the ‘One Belt One Road’ (OBOR) project.
Last month, Chinese Foreign Minister Wang Yi said that Vietnam and China “have agreed that the resolution of maritime issues is extremely important for the healthy and sustainable development of bilateral relations.”
“Both sides should better manage disputes through talks and refrain from taking unilateral actions that could complicate and further escalate disputes. At the same time, we must promote cooperation at sea, including talks on joint exploration,” Wang said.
However, Beijing has continued to develop South China Sea islands such as military installations, communication blockers, cruise missiles and other military equipment on the islands in recent months, to which regional powers, including Vietnam, have opposed.
Yet other players such as the Philippines reached an agreement with China, with Chinese Prime Minister Li Keqiang and Philippine President Rodrigo Duterte last November creating a “code of conduct” to “reduce tensions” and risks.”