Vietnam Threatens Fines for Illegal Energy Exploration in its Waters

Viet · Sep 2, 2020

An archive photo of a Chinese coast guard ship being blocked by three Vietnamese coast guard vessels near a Chinese oil drilling rig in disputed waters in the South China Sea, taken May 15, 2014.
AFP

Vietnam has issued a new decree against illegal energy exploration in its territory on land and sea, threatening violators with fines and potentially seizing their property, state media reported Monday.

The law applies to both Vietnamese entities and foreign nationals, and is not explicitly aimed at any particular companies or countries. But Vietnam has long-standing differences with China over competing claims to the South China Sea and rights to resources there.

Decree No. 99/2020/ND-CP, or “Regulations on Penalties for Administrative Violations in Oil and Gas,” was adopted on Aug. 26 and reported by the Hanoi Moi (New Hanoi) newspaper Monday. The law concerns virtually any unlicensed activity linked to oil and gas exploration or work on oil rigs in Vietnamese territory, and establishes numerous penalties.

The highest fine possible is between 1.8 billion Vietnamese dong (roughly U.S. $78,000) and 2 billion dong (roughly $86,500), for “acts infringing upon the land areas, islands, internal waters, territorial waters, exclusive economic zones and continental shelf of the host Socialist Republic of Vietnam, to research, search and explore oil and gas.” Other fines for yet more violations can be added on.

Other potential punishments include the confiscation of property and equipment used to explore for energy reserves, expulsion of foreign nationals involved from Vietnam’s territory, and forcing violators to “pay back illegal benefits” from their operations.

Numerous agencies, including provincial officials, the Vietnamese Border Guard, and the Vietnam Coast Guard, are empowered under the new law to assess and punish potential violators.

Vietnam has a documented history of tension with neighboring China over oil exploration in the South China Sea. China claims virtually the entirety of the sea on the basis of “historic rights” – a position unsupported by international law – including parts of Vietnam’s exclusive economic zone, which extends 200 nautical miles from Vietnam’s coast.

This tension has sometimes sparked dangerous standoffs between the two countries. China National Offshore Oil Corporation (CNOOC) dropped an oil rig in waters claimed by Vietnam in 2014, kicking off nationalist protests in both countries and sparking clashes between Vietnamese and Chinese fishing vessels and coastguard ships around the site of the oil rig.

Additionally, China Coast Guard (CCG) ships and survey vessels owned by the Chinese government have shown up near Vietnamese oil fields, pressuring international oil companies into pulling out of drilling and exploration deals with the Vietnamese government. The Noble Clyde Boudreaux, an oil rig employed by Vietnam to drill at the edge of its waters, had its contract cancelled in mid-July after never leaving port.

Chinese survey vessels searching for energy reserves have appeared with greater frequency in Vietnamese waters in recent months. Ship-tracking data shows the Hai Yang Di Zhi 8, which has previously been caught surveying inVietnamese waters flanked by CCG ships, was within 145 nautical miles of Da Nang on Sunday.

Spanish company Repsol and United Arab Emirates-owned Mubadala sold their shares in a Vietnamese oil field to Vietnam’s state oil company, PetroVietnam, on June 12, after political pressure from China rendered them unable to drill. Vietnam ended up paying some $1 billion to compensate the companies for their loss, The Diplomat reported.

Most recently, China has sent coastguard ships to Vanguard Bank, a submerged feature at the western tip of the South China Sea, off Vietnam’s southernmost coast. It sits on Vietnam’s continental shelf, but China claims it under its expansive “nine-dash line” boundary.

A CCG ship numbered 5204 has been patrolling around Vanguard Bank, near oil rigs operated by Russia’s Rosneft, since Aug. 17. Prior to that, China’s CCG 5402 was in the same area, meaning China has maintained a constant coast guard presence since early July.

Rosneft is one of the few remaining international oil companies that works with Vietnam. Exxon Mobil is another one, and in June Vietnam announced a plan for Exxon Mobil to invest in liquefied natural gas (LNG) plants in the country. Exxon Mobil currently holds the right to an oil field just outside of China’s nine-dash line.

China maintains that any oil and gas exploration in the South China Sea must be done with Chinese state-owned enterprises (SOEs) or companies as joint partners. Six other Asian governments have territorial claims or maritime boundaries that overlap with China’s in those waters.

Since July, the United States intensified its criticism of China’s stance, declaring its claims to offshore resources across most of the South China Sea as “completely unlawful” and accusing China of bullying its Southeast Asian nations in an attempt to control those resources.