South China seizure

Disputes between China and its neighbours threaten regional development

CONFLICTS that emerged in the South China Sea of yore usually involved marauding pirates. Now the pirates of real consequence work their trade in the Gulf of Aden and the Indian Ocean, while the kind of trouble emerging in ocean waters of Southeast Asia are distinctly political.


Vietnam and China both claim the right to explore for oil in waters off of south-central Vietnam. The latest outbreak in the conflict over the area occurred in June, when Vietnam’s foreign ministry claimed that a Chinese patrol boat had interfered with a seismic survey vessel operated by PetroVietnam, the state-run oil company, cutting survey cables in the process. PetroVietnam is working with ExxonMobil, Chevron and others looking for subsea oil there. China has been accused by the Philippines and Japan of similarly aggressive behaviour in the South China Sea.

The political dispute has gone quiet since then, but repercussions have emerged in the maritime business arena. Port operator China Merchants Holdings (International) has blamed political tensions between China and Vietnam for the delay in a project to build a container terminal in southern Vietnam. The CMIH venture will occupy 2,400 m of shoreline in Vung Tau Province, which is the site of several other proposed projects.

However, CMIH requires an investment certificate from the local government which has not materialised. The company says that political tensions between Vietnam and China are the most likely explanation.

CMIH is listed in Hong Kong, but is also part of the China Merchants Group, the mainland giant. If the company’s hunch on the delay is correct, then its project is victim to a decades-old dispute that should have long ago been defused at the negotiating table rather than fuelled by arbitrary naval displays. That Chinese company projects are being stalled because of it should be incentive enough to do so.

Source: Lloyd's List Asia