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Sep 10, 2019 / 22:37

Vietnam, Russia strengthen oil cooperation amid China aggression in South China Sea

Oil and gas exploitation is part of key pillars in the long-lasting bilateral ties which both Hanoi and Moscow have vowed to.

Vietnam and Russia have stepped up its oil and gas cooperation in a latest move amid China’s growing expansionism in the South China Sea. 
Vietnamese Deputy Prime Minister Trinh Dinh Dung and Russian Deputy PM Maxim Akimov. Photo: VGP
Vietnamese Deputy Prime Minister Trinh Dinh Dung and Russian Deputy PM Maxim Akimov witnessed the agreement signing between the two ministries. Photo: VGP

Vietnamese Deputy Prime Minister Trinh Dinh Dung and his Russian counterpart Maxim Akimov agreed that oil and gas cooperation bears strategic significance to Vietnam – Russia relations, local media has reported.  

The two deputy PMs held talks on the sidelines of the 5th Eastern Economic Forum held in Vladivostok, Russia from September 4 to 6.

Dung affirmed that Vietnam welcomes Russia’s oil and gas companies to carry out exploration and exploitation activities in the country’s continental shelf in line with international law, including the 1982 United Nations Convention on the Law of the Sea (UNCLOS).

He also asked the Russian government to facilitate Vietnamese joint ventures’ involvement in new oilfields in Russia’s territory. 

At the meeting, they agreed to hold the 22nd meeting of the Vietnam – Russia Intergovernmental Committee in early October this year.

Strong oil cooperation

For years, energy is one of key pillars in the Vietnam – Russia ties and once again affirmed by top government leaders Nguyen Xuan Phuc of Vietnam and Dmitry Medvedev of Russia. 

In Phuc’s visit to Russia in May 2019, they affirmed energy remains one of key pillars in the bilateral relations, saying that the two sides would support both Vietnamese and Russian firms in the exploration and operations of oil and gas in Vietnam’s continental shelf and in Russia’s. 

Companies at the center of attention include Gazprom, Novatek, Rosneft, among others.

Rosneft in May 2018 started drilling at the LD-3P well, part of the Lan Do “Red Orchid” offshore gas field in Block 06.1 which is 370 km southeast of Vietnamese coast. China’s U-shaped line marks a vast expanse of the South China Sea that it claims, including large swathes of Vietnam’s Exclusive Economic Zone. Maps of the area indicate the block is around 85 km inside the area, according to Reuters.

In May 2019, Rosneft started the drilling operation offshore Vietnam’s southern city of Vung Tau which uses its semi-submersible drilling rig HAKURYU-5 for the drilling operation.

According to data on Rosneft’s website, the Russian oil company is engaged in gas and condensate production projects on 2 offshore Vietnam blocks Block 06.1 and Block 05.3/11, and is also a participant of Nam Con Son Pipeline project offshore Vung Tau.  

Vietsovpetro, a joint venture set up in 1981 with 51% stake held by PetroVietnam and 49% by Russia’s wholly state-owned Zarubezhneft, operates in petroleum exploration and production on the southern continental shelf of Vietnam. 

The company extracted 4.74 million tons of condensate and 234 million cubic meters of natural gas, earning revenue of US$1.97 billion in 2017, up 3.5% on year. In the 2015 visit, Medvedev said that the two countries would continue running the joint venture for a long time, at least until 2030.  

Novatek announced in May (during the visit paid to Moscow by Vietnamese PM Phuc) that the company and Vietnam’s Ninh Thuan Province signed a memorandum of understanding to develop an integrated energy-generating project with the use of liquefied natural gas (LNG) within Vietnam.