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Vietnam seeks ways to develop oil, gas industry amid China's harassment in South China Sea
Linh Pham 18:08, 2019/07/22
Vietnam defends its oil and gas operations as energy is one of three pillars in Vietnam`s economy.
Vietnam’s senior officials last week gathered in Hanoi to discuss measures to develop oil and gas industry in the course of escalating Chinese harassment in the South China Sea (SCS). 
 
An oil rig of Vietnam in South China Sea. Photo: PVN
An oil rig of Vietnam in South China Sea. Photo: PVN
Different measures including changes in policies, investment incentives, and tolerance in regulations were recommended in the conference titled “Ensuring national energy security” held in Hanoi last week, local media reported.  

Nguyen Hong Minh, vice head of Vietnam Petroleum Institute (VPI), said the country needs roughly US$13-US$14 billion to finance projects and increase reserves in the 2019-2025 period but no certain financial source has been found. 

Truong Dinh Tuyen, former minister of Industry and Trade, said an urgent task is to amend the Law on Petroleum to facilitate the investment in a risk-laden industry.  

“Energy security is one of three pillars (food – finance – energy) of the economy, affecting two others,” Tuyen attributed the importance of the legal amendment to drawing foreign investment into oil and gas exploration and exploitation.
 
Vietnamese officials and experts dicuss measures to develop oil and gas industry. Photo: Tuoi Tre
Vietnamese officials and experts dicuss measures to develop oil and gas industry. Photo: Tuoi Tre
Meanwhile, Tran Sy Thanh, chairman of Vietnam Oil and Gas Group (PetroVietnam-PVN), said regulations on petroleum exploration remain tight with high fees for water surface and cumbersome administration procedures for business license, capital hike, and oil exploration and drilling. 

Vietnam posts average energy demand growth of 10% annually, of which petroleum accounts for 35% of the total consumption. 

So far, Vietnam’s oil and gas industry has exploited nearly 400 million tons of crude oil and 150 billion cubic meters of natural gas, generating 170 billion kWh of electricity which accounts for 30% of the country’s total electricity volume, and providing 55 million tons of petroleum which meet 33% of the country’s consumption, according to PVN’s Chairman Tran Sy Thanh. 

As of end-2018, PVN made revenues of more than US$374 billion and contributed US$105 billion to state coffers. 

Vietnam raised the energy security issues in the context that China has interfered with Vietnam’s oil and gas exploitation activities within the Vietnamese exclusive economic zone (EEZ) in SCS. 

Secretary of State Mike Pompeo said in March this year that China, by blocking development in the South China Sea through coercive measures, was preventing ASEAN members from accessing more than US$2.5 trillion in recoverable energy reserves.
 
Chinese harasses Vietnam's oil and gas operations in South China Sea. Photo: CSIS
Chinese harasses Vietnam's oil and gas operations in South China Sea. Photo: CSIS
Chinese harassment of Vietnam’s oil and gas operations within Vietnamese EEZ

The US-based Center for Stragegic & International Studies (CSIS) said that twice in the last six weeks, the same China Coast Guard (CCG) vessel has harassed oil and gas operations by its neighbors namely Vietnam and Malaysia. Meanwhile, a Chinese state-owned vessel has been conducting a seismic survey of oil and gas blocks off the Vietnamese coast.

Since June 16, Chinese Haijing 35111 has been patrolling an area of the seabed about 190 nautical miles off the coast of southeastern Vietnam. The patrols centered on oil and gas Block 06-01, which is situated northwest of Vietnam’s Bai Tu Chinh (Vanguard Bank) on the Vietnamese continental shelf, CSIS reported.

Today, natural gas from Block 06-01’s Lan Do field provides up to 10% of Vietnam’s total energy needs. Russia’s Rosneft took over as operator of the block in 2013 when it acquired TNK-BP. In May 2018, Rosneft contracted the Hakuryu-5, a semi-submersible rig owned by Japan Drilling Company, to drill a new production well in 06-01 at a second gas field called Lan Do.
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