China and Vietnam spar on high seas over $2.5 trillion in energy

Bloomberg

When a Chinese state-owned survey vessel sailed into waters off Vietnam’s coast in early July, it unleashed a high-seas standoff with trillions of dollars at stake that risks drawing in Russia and the US.
For weeks now the Haiyang Dizhi 8 has zigzagged across a square block of water to study the seabed in an active drilling block operated by Russia’s state-owned Rosneft Oil PJSC. Satellite images show more than a dozen Chinese and Vietnamese coast guard ships maneuvering around the surveyor, which at one point included a heavily-armoured Chinese cutter known as “The Beast” that is larger than most American destroyers.
The location is particularly worrying for smaller countries looking to extract oil and gas from disputed parts of the South China Sea: It sits three times closer to Vietnam than the Chinese mainland.
The Chinese move comes just as it’s holding negotiations on joint exploration in a disputed area with the Philippines, which has sought closer ties with Beijing since President Rodrigo Duterte came to power. Vietnam has persistently rejected China’s nine-dash line map of the sea as a basis for cooperating on energy resources, prompting tensions to increase as Beijing’s military strength grows.
The US criticised China’s move to send the survey to Vietnam as “an escalation by Beijing in its efforts to intimidate other claimants out of developing resources in the South China Sea.” The State Department statement said China was blocking Southeast Asian nations from accessing an estimated $2.5 trillion in unexploited hydrocarbon resources.
For Vietnam — a country that produced 22-33 million tons of oil from its offshore blocks each year, and has as much as 4.4 billion tons in crude oil and gas reserves there — armed Chinese ships within its maritime border could have a devastating impact on an industry that made up 20% of Vietnam’s GDP from 1986-2009.
China has defended the provocation, saying Vietnam should not have carried out its decision in May to unilaterally begin
exploitation work in a
“Chinese jurisdiction.”
According to a leaked draft of the negotiating text of the code of conduct dated June 2018 and seen by Bloomberg, China has stated its intention to achieve exclusive joint explorations in the South China Sea by eliminating any foreign presence.

The draft also expresses China’s intent to win veto rights over any joint military exercises with foreign militaries and attain regular joint patrols with Southeast Asian countries.