China-Vietnam Tensions High over Drilling Rig in Disputed Waters

Tensions between China and Vietnam over the disputed South China Sea are at their highest levels in years. On May 2, the state-owned China National Offshore Oil Corporation (CNOOC) placed its deep sea drilling rig HD-981 in disputed waters south of the Paracel Islands. Vietnam objected to the placement, declaring that the rig is located on its continental shelf. China has since sent approximately 80 ships, including seven military vessels, along with aircraft to support the rig. In response, Hanoi dispatched 29 ships to attempt to disrupt the rig’s placement and operations.

The situation escalated dramatically on May 7, when Vietnam accused Chinese vessels of turning high powered water cannons on the Vietnamese ships and eventually ramming several vessels. The incidents reportedly left six Vietnamese injured and several of the country’s ships damaged. Hanoi released photos and videos of the incidents to support its claims.

The implications of these developments are significant.  The fact that the Chinese moved ahead in placing their rig immediately after President Obama’s visit to four Asian countries in late April underlines Beijing’s commitment to test the resolve of Vietnam, its ASEAN neighbors and Washington. Beijing may also be attempting to substantially change the facts on the seas by moving while it perceives Washington to be distracted by Russian aggression inUkraine, developments in Nigeria, and Syria. If China believes Washington is distracted, in an increasingly insular and isolationist mood and unwilling to back up relatively strong security assertions made to Japan and the Philippines and repeated during President Obama’s trip, these developments south of the Paracel Islands could have long term regional and global consequences.

Q1: Where is the rig, really?

A1: The war of words between Beijing and Hanoi has largely focused on the status of the area where HD-981 was placed. Vietnamese officials insist that it lies on their continental shelf, where according to the UN Convention on the Law of the Seas (UNCLOS), Vietnam has exclusive rights to all mineral and hydrocarbon resources.

The rig was placed near the edge of two hydrocarbon blocks already created by Hanoi, though not yet offered for exploitation to foreign oil and gas companies. It also sits near blocks 118 and 119, where U.S.-based ExxonMobil discovered substantial oil and gas reserves in 2011 and 2012. In 2013, Exxon and Vietnam’s state-owned PetroVietnam announced plans to build a $20 billion power plant to be fueled by the oil and gas from those blocks. Those discoveries help explain why CNOOC chose to place HD-981 nearby.

China’s Ministry of Foreign Affairs has responded to Vietnam’s complaints by insisting that the rig was placed “completely within the waters of China's Paracel Islands.” This presumably refers to the 200 nautical mile exclusive economic zone and continental shelf that those islands—which are occupied by China but claimed by Vietnam—would generate under UNCLOS if they met certain requirements.

HD-981 was placed at 15°29’58’’ north latitude and 111°12’06’’ east longitude. It is about 120 nautical miles east of Vietnam’s Ly Son Island and 180 nautical miles south of China’s Hainan Island—the two nearest features that indisputably generate a continental shelf. As such, it not only sits on Vietnam’s claimed extended continental shelf, but also well on the Vietnamese side of any median line that might be negotiated between the two shelves from the Chinese and Vietnamese coasts, as indicated by the white lines in the map below.

Q2: Who is in the right?

A2: China’s Ministry of Foreign Affairs appears to be basing its case on the assumption that Triton Island, 17 miles to the north of HD-981, or another of the Paracels meets the UNCLOS habitability requirement for generating its own continental shelf. If that were assumed to be true, then HD-981 would indeed fall within the maximum hypothetical area of dispute generated by the Paracels, shown in red below. This is the maximum dispute because it gives the tiny Paracel Islands equal weight in delimitation with the entire Vietnamese coast facing them—a proposition that borders on the absurd.

So China can make a legal case, however flimsy, for control over the continental shelf on which HD-981 sits. But that area is clearly in dispute. To unilaterally drill on it is a violation of UNCLOS’s admonition that states in a dispute, “in a spirit of understanding and cooperation, shall make every effort to enter into provisional arrangements,” and shall not “jeopardize or hamper the reaching of [a] final agreement.” It is also clearly contrary to the 2002 Declaration on the Conduct of Parties in the South China Sea that China signed with the members of the Association of Southeast Asian Nations (ASEAN), including Vietnam. In that agreement, all parties pledged to “exercise self-restraint in the conduct of activities that would complicate or escalate disputes and affect peace and stability.”

Hanoi, on the other hand, has restricted its oil and gas activities in the area to those fields, like blocks 118 and 119, that lie outside the maximum area of legal dispute.


Q3: What comes next?

A3: The deployment of HD-981, which Beijing insists will remain in place until August 15, has clearly ratcheted China-Vietnam tensions to a new level. Hanoi seems determined to disrupt the rig’s operations. And, in contrast to the Philippines, it has the capabilities—Russian-built Kilo-class submarines and an outdated but sizeable surface and air fleet—to do so. This means there is a real threat that acts of brinksmanship, like the recent ramming of Vietnamese vessels, could escalate quickly. Vietnam’s neighbors and outside partners like the United States must use every available channel to urge caution on both sides.

On the other hand, Vietnam’s relative naval capabilities will likely help temper Chinese assertiveness. After all, despite the presence of Chinese naval vessels around HD-981, it appeared that only Chinese Coast Guard vessels were involved in harassing and deterring Vietnamese ships attempting to enter the waters around the rig. The two nations’ and their leaders are as familiar with each other as anyone in the Asia Pacific, and they have substantial channels for communications, including top-level naval hotlines. This could also help avoid a larger crisis.

Vietnam has already launched a diplomatic campaign to build support abroad and paint China as the aggressor. Given other recent provocations by China against its neighbors, this will prove easy. This weekend, Vietnamese prime minister Nguyen Tan Dung will join his fellow leaders from across Southeast Asia at the ASEAN Summit. The placement of the drilling rig, along with China’s patrols at Malaysia’s James Shoal earlier this year and attempts to block resupply of Philippine troops at Second Thomas Shoal in March, will ensure that the South China Sea disputes take center stage. There is no telling who will blink first in the stand-off over HD-981, but the one thing that is certain is that China’s newest provocation will further heighten the threat perception among ASEAN states and drive them closer to each other and interested outside parties, especially Japan and the United States.

Ernest Bower is the Sumitro Chair for Southeast Asia Studies and Gregory Poling is a fellow with the Sumitro Chair for Southeast Asia Studies at the Center for Strategic and International Studies in Washington, D.C.

Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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Gregory B. Poling
Senior Fellow and Director, Southeast Asia Program and Asia Maritime Transparency Initiative

Ernest Z. Bower