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Thayer South China Sea Trifecta: New Maritime Law, China's Oil Leases, And San Sha City

Thayer South China Sea Trifecta: New Maritime Law, China's Oil Leases, And San Sha City

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Published by Carlyle Alan Thayer
Six analyses focusing on Vietnam's passage of a new Maritime Law and the response by China in offering oil licenses in Vietnam's EEZ and raising the responsibility of San Sha administrative over the South China Sea.
Six analyses focusing on Vietnam's passage of a new Maritime Law and the response by China in offering oil licenses in Vietnam's EEZ and raising the responsibility of San Sha administrative over the South China Sea.

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Categories:Types, Research, History
Published by: Carlyle Alan Thayer on Jul 07, 2012
Copyright:Attribution Non-commercial


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Background Briefing:South China Sea: China NationalOffshore Oil Company (CNOOC)Carlyle A. ThayerJuly 1, 2012
[client name deleted]With the case of CNOOC's [China National Offshore Oil Company] invitation for bids,how did the international organizations decide? What can Vietnam do next if CNOOCcontinue to invite bids and exploit at that zone?ANSWER: I am not aware that any major oil company has yet made a public
statement about CNOOC’s invitation for bids. The CSIS conference in Washington
was attended by persons with a knowledge of commercial oil operations. Mostspecialists were agreed that there was too much risk of getting caught up inconfrontation between China and Vietnam to make any long term plans to invest inoil exploration. Oil companies will base their judgments on the risks involved of operating in a disputed area. Exxon Mobile and GAZPROM are already operating in
Vietnam’s Exclusive Economic Zone that CNOOC’s now claims. Vietnam has said it
will protect all foreign companies.Vietnam needs to conduct continuous patrols by its Maritime Police and maritimesurveillance craft over its EEZ. At the same time, Vietnam could deploy its navy for
appropriate exercises and escort duties. If any foreign company takes up China’s
offer, Vietnam should lodge diplomatic protests to both the foreign company andChina and continue to intensify patrols in the particular block concerned. This issueshould be raised at the highest levels between Vietnamese and Chinese leaders.Vietnam also needs to develop a diplomatic strategy to put China on the back footlegally and politically.
Suggested citation: Carlyle A. Thayer, “
South China Sea: China National Offshore OilCompany (CNOOC)
Thayer Consultancy Background Brief 
, July 1 2012.
Thayer Consultancy
ABN # 65 648 097 123
Background Briefing:South China Sea Trifecta: NewMaritime Law, China
s OilLeases and San Sha CityCarlyle A. ThayerJuly 1, 2012
[client name deleted]
1) China National Offshore Oil Corporation (CNOOC)’s invitation for international
bids is an illegal activity of no value, which seriously violates the 1982 UN Conventionon the Law of the Sea and does not comply with international oil and gas practices.How do you think of China's strategy and their next steps?
ANSWER: CNOOC’s release of their international bids was mainly a
political action
designed to counter the passage of the Luat Bien by Vietnam’s National Assembly.
Chinese diplomats have lobbied the Vietnamese government not to pass this law.
China therefore had plenty of warning to prepare what action to take. China’s
actions, according to some international lawyers, has created a legal dispute.International law requires both parties to stop any action in favour of their claimuntil the matter is settled. The problem with this interpretation is that China willnever take its claim to international arbitration. In short, China seeks to muddy thelegal waters and still advance its claims.2) China also announced to establish Nan Sa city. This is the administrative ormilitary one and its aim toward East Sea?ANSWER: China first sought to raise the status of San Sha in 2007. The creation of San Sha city is an administrative act. But given the recent tensions caused by CNOOC,Chinese military authorities are arguing San Sha city should have a military function.This is mainly symbolic. The South Sea Fleet has responsibility for the South ChinaSea and it has a major naval base at Yalong near Sanya.3) Could you please give your comment about Law of the Sea of Vietnam. How are itsrole in present circumstance (situation)?ANSWER: Vietnam should release the full text of this law as soon as possible. The law
is a natural progression of Vietnam’s development plans. In 2007 the party’s 4
Central Committee plenum called for the drawing up of a maritime developmentplan to int
egrate Vietnam’s coastal economy with its maritime economy. The Luat
Bien incorporated international law, the UN Convention on Law of the Sea, intodomestic legislation. It assigns responsibility for each time of maritime space:internal waters, territorial waters, contiguous zone, exclusive economic zone,continental shelf, island and archipelagos. Clarity and transparency contribute to
Thayer Consultancy
ABN # 65 648 097 123
regional peace because the law regulates the behaviour of both Vietnamese and
foreigners in Vietnam’s maritime domain.
4) CSIS in Washington also referred to issues of East Sea relate Vietnam - China,China - Philippines and Asean - China? How about CSIS's results? And at CSIS, howdid international delegates comment about CNOOC's invitation for int'l bids, aboutnine-dotted line, about Vietnam and Asean solutions?ANSWER: The CSIS conference was held to understand the current nature of themaritime disputes in the South China Sea and more importantly to explore optionsfor managing the dispute. The conference was not designed to reach consensus.
Only the Chinese scholars supported CNOOC’s actions.
Most of the scholars were
highly critical of CNOOC’s action on legal and political grounds. Some of the
specialists offered the view that no major international oil company would take up
CNOOC’s offer to bid for a block. Senator Joseph Liberman offered the suggestion
that the claimant states should take their dispute to third party arbitration. Another
suggestion was to study the World Trade Organization’s dispute settlement
mechanism and see if it could be adopted to the South China Sea disputes. In other
words, to test China’s actions as a threat to free trade under the China
-ASEAN FreeTrade Agreement (FTA) and other relevant FTAs.
CNOOC’s actions come on the eve of the annu
al meeting of the ASEAN RegionalForum. This will mean the South China Sea dispute will attract renewed internationalattention. China will be in the spotlight. This is must be an unwelcome developmentfor the Foreign Ministry in Beijing which has worked for a year now to tone down
and deflect international criticism. How can Chin’s Foreign Ministry
now participatein confidence building measures under the DOC, or even negotiate a Code of Conduct, when its efforts are contradicted by the state-run CNOOC.
Suggested citation: Carlyle A. Thayer, “
South China Sea Trifecta: New Maritime Law,China
’s Oil Leases
and San Sha City
Thayer Consultancy Background Brief 
, July 1,2012.

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