CNOOC Rig, Formerly Launched Offshore Vietnam, Discovers Gas Field 150km South of Hainan Island

An offshore oil rig that caused considerable tensions between China and Vietnam after being deployed off the coast of Vietnam has revealed the estimated size of the previously-discovered gas field at 100 billion meters.  The estimates, approved by China‘s Ministry of Land and Resources, conservatively project CNOOC‘s annual extraction capacity at four billion cubic meters per year (56.5 million cubic feet per day) and are the highest daily flow of all of the rig’s owner’s wells during testing.  The gas block, named Lingshui 17–2, is located 150km south of Hainan Island near Vietnam‘s maritime border at a depth of 1,500 meters, on the cusp of deep-water and ultra-deep.  The location of the Lingshui field is shown below.

Previously, on May 8, 2014, China — via China National Offshore Oil Corporation (CNOOC) — moved and parked the same rig off the disputed Paracel Islands offshore Vietnam.  It was ultimately withdrawn on July 15, 2014 per an announcement by China Oilfield Services Ltd., and redeployed to an area offshore China’s Hainan Island.  Nevertheless, China has stated its intention to move additional rigs into the disputed area in the future 

The deployment of the the Haiyang Shiyou 981 rig came over the immediate and persistent protests of Vietnam.  The Vietnamese Coast Guard sought to obstruct the maneuvering of the oil rig, leading to physical clashes between boats, which have continued.  According to Vietnamese officials, as of June 5, Chinese ships had damaged 24 Vietnamese boats and 12 Vietnamese fisheries officers had been hurt.  The Vietnam Fisheries Surveillance Department said that China maintained, at the time, about 115 ships, including up to 40 coast guard boats, 30 cargo vessels and tugboats, about 45 fishing vessels and six military ships and a reconnaissance aircraft in the vicinity of the rig.  China initially asserted that the rig would stay in place until early-August (although it was removed, instead, in mid-July).

On June 22, China reportedly mobilized some 137 ships, including five military ships, to protect its the CNOOC oil rig, according to the Vietnam Fisheries Surveillance Department.  Vietnam’s law enforcement forces also detected two Chinese reconnaissance aircraft operating at an altitude of 1,000 to 2,000 meters about 12 to 13 nautical miles from the position of the rig.

The CNOOC rig represents China’s first deep-water rig, a 138-meter high platform that is capable of operating in 3,000 meters of water.  The CEO of CNOOC has labeled its offshore drilling rigs as “strategic weapons” of the state.  In the aftermath of this rig being planted in the South China Sea, violence by Vietnamese towards Chinese people and assets living in Vietnam led to the evacuation by China of some of these Chinese residents.  On June 8, reports indicated that China had instructed its state-owned enterprises to cease business with Vietnam in another economic and financial dimension to rising tensions catalyzed by the offshore rig.