Moscow Continues to Challenge Beijing After Vietnam, Russia Helps Indonesia Exploit South China Sea Resources

A standoff between the Chinese Communist Party and Indonesia erupted recently over disputed waters in the South China Sea. Beijing accuses Indonesia of drilling an exploratory well for an oil and gas field block within the maritime boundary drawn by the Chinese Communist Party. The Russian state-owned energy giant happens to be the owner of the oil and gas field. Before Indonesia, Russia also helped Vietnam with oil and gas exploration in the South China Sea, and some of the oil and gas fields are also located within the so-called “nine-dash line” drawn by the Chinese Communist Party, which has led to discontent.

Reuters reported a few days ago that Indonesia drilled two appraisal exploratory wells in the tuna block in THE NORTH NATUNA SEA, the southernmost part of the South China Sea, in late June this year. Drilling operations continued until the end of mid to late November.

The Russian-owned block is within territory claimed by the Chinese Communist Party

Indonesia’s move drew displeasure and protests from China. China demanded that Indonesia stop the drilling operations, claiming that the area is within China’s so-called “nine-dash line,” which is Chinese territory. But Indonesia’s response was that the drilling would never stop because it is Indonesia’s sovereign right. Some ships from both sides had been facing off in the waters of the tuna block for months for this reason.

Russia’s state-owned energy giant, ZARUBEZHNEFT, owns half of the tuna block. Russian media reported that the drilling of two exploratory wells in the tuna block was financed entirely by OOCL. In the past, all the shares of the tuna block were owned by PREMIER OIL, a British company.

The Russian Gazette reported last February that OOCL had been negotiating with Britain’s PREMIER OIL since the previous year to buy half of the tuna block, with the remaining half continuing to be held by the British energy company. Reports say it’s a good deal for the Russian energy giant.

In late June, on the eve of the start of drilling operations in the tuna block, the president of Overseas Oil Company Kudryashov said his company now owns 50% of the Indonesian tuna block, but the block is still in the geological exploration stage, and the exact amount of oil and gas reserves will be revealed in a few months.

Russia expands its presence in the South China Sea and wants to link the Indonesian and Vietnamese blocks together

Kudryashov said that his company plans to build a new gas-based oil and gas field complex in the South China Sea region, based on some of the oil and gas blocks currently owned by OJSC in Vietnam and in Indonesia.

“According to the official website of OOCL, the water depth of the tuna block is about 110-120 meters. This block is located in Indonesia’s offshore exclusive economic zone. It is just over 108 kilometers away from Vietnam’s Block 06-1.

Media reports say that some of the oil and gas fields owned by Overseas Petroleum Corporation in Vietnam have been built with well-developed infrastructure such as oil and gas transmission. The company’s linking of the blocks in Indonesia and Vietnam will facilitate the exploitation of the tuna blocks in Indonesia.

Russian exploration in Vietnam was protested by the Chinese Communist Party, but Russia and Vietnam continue to cooperate

Block 06-1 is also located within what China claims is the “nine-dash line. This block was previously owned by another Russian energy giant, Rosneft. In addition to Block 06-1, some of Rosneft’s other past blocks in Vietnam are also located within China’s claimed maritime boundary. This has led to discontent and protests from China over Rosneft’s oil and gas exploration in Vietnam.

“Rosneft is the main supplier of Russian oil to the Chinese market and has many operations in China. However, “Overseas Oil Company” does not have any business ties with China. As a result, Rosneft sold all its offshore oil and gas operations in Vietnam to OOCL this year.

When China protested in the past against Rosneft’s exploitation of blocks 06-1 in the South China Sea for Vietnam, many Russian analysts of China issues resented the fact that China had once brought this dispute between the two sides to the forefront, which affected Russian-Chinese relations. China’s protests are also seen by Russia as an increasingly nationalistic aspect of Chinese diplomacy.

It is interesting to see what China’s next move will be in response to OOCL’s continued cooperation with Indonesia and Vietnam in oil and gas exploration in the South China Sea region. However, unlike Rosneft, which has no ties to China, it is difficult for China to find effective tools to directly pressure or sanction OOCL. The “Rosneft” company has been a major player in the Chinese oil industry since its inception.

“After Rosneft’s withdrawal from Vietnam, OJSC became the main Russian energy company cooperating with Vietnam in the South China Sea. “The company and its joint ventures with Vietnam currently guarantee 42% of oil and 20% of gas extraction in Vietnam, OOCL said.

During the visit of Vietnamese President Nguyen Xuan Phuc to Moscow a few days ago, OJSC President Kudryashov also took part in the talks between the Russian leader and Nguyen Xuan Phuc. The Russian and Vietnamese leaders decided to strengthen energy cooperation between the two countries and signed an agreement on it.

On this occasion, Nguyen Xuan Phuc paid a special visit to the headquarters of the Overseas Oil Company in Moscow and met with some of the company’s old employees who worked in Vietnam. Nguyen Xuan Phuc also awarded the Order of Friendship of the State of Vietnam to President of OOCL Kudryashov and Chairman of the Board of Directors of the company Murov.

After the US and China, Russia enters Southeast Asia and the South China Sea

Russia and Vietnam have been cooperating on oil and gas resources in the South China Sea for a long time, starting more than 40 years ago in the Soviet era. But the fact that Russia is now moving into Indonesia after Vietnam shows the growing importance Russia is placing on the South China Sea and Southeast Asia. Some Russian strategic analysts say Russia could act as a third force after the U.S. and China, providing an alternative for Southeast Asian countries that are reluctant to take sides between the U.S. and China.

Russia does not support China in the South China Sea, as some may think, but only supports the countries in the region to resolve their disputes themselves, said Rokshin, a Russian scholar who focuses on Southeast Asian affairs. He believes that China’s “nine-dash line” theory does not stand up to the test of international law.

According to China, it has sovereignty over 80 percent, 90 percent of the South China Sea,” Roxane said. Communist leaders claim that China’s sovereignty is unquestionable. But the arguments that China gives are historical factors, but these are not tenable from the point of view of international law.”

In addition to the exploitation of oil and gas resources in the South China Sea region, Russia and Indonesia have increased cooperation in other areas. For years, Russia has been actively marketing Su-35 fighter jets and other weaponry to Indonesia. Russia and Indonesia co-led the first joint Russian-ASEAN maritime military exercise just held. Russia sent a large anti-submarine ship from the Pacific Fleet to participate.

The location of this exercise was not in the South China Sea. Warships from Russia and several ASEAN countries first assembled in the waters off Indonesia’s North Sumatra province and then proceeded to hold military exercises near the Strait of Malacca.