Over the weekend of May 3 and 4, China sent an oil rig into disputed waters of the South China Sea to begin oil exploration. The rig is near the Paracel Islands, inside the 200-mile exclusive economic zone of Vietnam, which angrily protested the decision. The Vietnamese government insists that the waters, as well as the oil and gas reserves held beneath, belong to Vietnam.
Where boundaries are drawn in the South China Sea has long been a source of regional tension, but China has escalated the conflict by moving to drill the first well inside disputed territory. China said the oil rig would be operating from now until August 15.
For its part, Vietnam is demanding that China cease drilling operations. “All foreign activities in Vietnam’s seas without Vietnam’s permission are illegal and invalid,” Vietnam’sForeign Ministry said in a statement. “Vietnam resolutely protests them.”
The move may also be a response to U.S. President Barack Obama’s recent trip to Southeast Asia, which included a dealwith the Philippines to allow for a greater American troop presence in the region. The U.S. and the Philippines kicked off a two-week long military exercise on May 5.
The U.S. Energy Information Administration estimates that the South China Sea holds 11 billion barrels of oil and 190 trillion cubic feet of natural gas, most of which is located in disputed territory. China believes the oil and gas reserves could be much larger.
This piece is cross-posted from OilPrice.com with permission.