Why China just pulled its provocative oil rig from disputed waters in the South China Sea

July 16, 2014
Obsession
Borders
July 16, 2014

China has removed a controversial oil rig in contested waters of the South China Sea. The rig’s provocative placements in the Paracel islands, claimed by China, Vietnam, and other countries in the region, sparked deadly Vietnamese riots against foreign-owned factories, collisions between Vietnamese and Chinese ships, and fear throughout the region of armed conflict erupting.

The oil rig, operated by China Oilfield Services Limited (CSOL), was originally expected to explore the area around the contested Paracels, claimed by both China and Vietnam, until mid-August. So why has China abruptly left a month early and moved its giant oil rig to the Chinese island of Hainan?

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One possibility is that China has proved its point: It can place naval assets wherever it wants in the South China Sea and weather the diplomatic and economic consequences. Beijing’s reaction to the Vietnamese riots (which largely targeted Singaporean, Taiwanese, and South Korean factories) was strangely muted, with none of the nationalistic bluster that accompanies its territorial spats with Japan. The Chinese government’s main diplomatic message was that other regional powers and institutions, such as the Association of South East Asian Nations and the United States, should stay out of China’s disputes with its neighbors.

It’s almost certain that the Chinese explorers didn’t find all that much oil and gas—and perhaps they never expected to in the first place. According to state-owned Xinhua news agency, CSOL found “signs” of oil and gas but gave no estimates of the reserves they discovered. Wang Zhen, deputy director of the CNPC Policy Research Office, told Xinhua: “The area has the basic conditions and potential for oil exploration, but extraction testing cannot begin before a comprehensive assessment of the data.”

Analysis from the US Energy Information administration has concluded that most fields in the South China Sea with discoverable oil and natural gas are in shallow coastal waters, not in the offshore waters near contested islands like the Paracels or the Spratly Islands.

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(EIA)

One side effect of China’s incursion has been to raise questions about the ability of the United States to preserve order in the region—even as it drew the US closer to Vietnam. Some US lawmakers have been pushing to lift an arms ban on Vietnam, and a recent survey found that Vietnamese citizens see the United States as their primary ally—and China their biggest threat.

Some within China saw the move as a capitulation to pressure from the US where a resolution was passed this week calling for China to remove its rig. Critical comments circulated Weibo today, with one popular blogger, Sheng Dalin, a reporter for Henan Daily, writing, “Is it really because [CSOL] finished drilling that they withdrew the rig?  The US just passed their resolution yesterday!” Another wrote, “Why are Chinese people such cowards?”

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