Vietnam cancels major oil project in the South China Sea under pressure from China

Vietnam has cancelled a major oil project in the South China Sea for the second time in a year, in the wake of Chinese pressure, according to a BBC report.

State-owned PetroVietnam ordered Spanish energy firm Repsol to suspend a project off the south-east coast, a well-placed industry source said. It means Repsol and partners could lose up to US$200 million of investment already made.

The news is unexpected as final preparations for commercial drilling were under way.

China is likely to regard this move as a significant victory. The Vietnamese decision seems to demonstrate that the recent show of force in the South China Sea by the United States has not changed Vietnam’s strategic calculations.

The American aircraft carrier USS Carl Vinson and its escort ships made a high-profile visit to Danang earlier this month.

Vietnam has been seeking to develop the so-called Red Emperor oil and gas discovery (known in Vietnamese as Ca Rong Do) since 2009.

As part of the ‘Red Emperor’ project, a rig, the Ensco 8504, was scheduled to depart from Singapore for the drill site on the 29^th March.

The site is in an area of the South China Sea designated Block 07/03 by Vietnam and Repsol’s local subsidiary had previously estimated that it contains 45 million barrels of oil and 172 billion cubic feet of gas.

Source: Energy-pedia