CNBC analysis provide critical pathway to political economy of why Vietnam must resist
CNBC.com breaks the official press
silence on the real issue behind China’s bold move into Vietnam’s coastal waters
CNBC
breaking the official media silence on the real
issue of the current phase of the China bold move into Vietnam waters is very
important and timely because a new layer of Americans are now engaging the
reality of the strategic situation in the South China beyond the controlled of
the selective information of the RT.Com, New York Times, BBC, The Diplomat and
Wall Street Journal. Few Americans have been brief by the main stream press on
the strategic importance of South China Sea energy to Vietnam immediate
development. CNBC offer a gateway to
a new matrix to view the Vietnam/China conflict The Diplomat by design, refused to share.
Vietnam is reaching the next
critical phase of its development of gas and is developing the Da Nang region
as the next New York City in Asian. The emerging natural gas power grid in Da
Nang will make the region cleanest city in Asia and a powerful emerging
computer integrated manufacturing center. The immediate key to Da Nang and southern
Vietnam next phase of economic growth is the use of gas from the ExxonMobil gas field from
blocks 117, 118, and 119 off Vietnam’s central coast.
The
military deployment of the Chinese oil rig HD-981
by Beijing
in striking distance of the ExxonMobil oil and gas field is designed to force
Vietnam to make a political deal in exchange for development of southern Vietnam
power grid.
May
21, 2014, the Wall Street Journal‘s article “Vietnam Says Chinese Oil Rig Poses 'Serious Threat' to Security” Prime
Minister Dung Says Rig's Installation in Disputed Waters Violates International
Law, had a picture China placed an oil rig near the Paracel Islands in the
waters of the South China Sea that China and Vietnam both claim. The Vietnamese
Coast Guard showed a video clip of one of its ships trying to get near the rig
but being rammed by a Chinese ship. Nowhere in its analysis, is the WSJ
readership informed of the relationship or distance between the Chinese rig and
the massive ExxonMobil oil and gas field nearby or any pipe lines. ExxonMobil
is one of 23 international companies helping Vietnam develop its energy sector. Exxon Mobil has accelerated the pace of its investment in
the US$20 billion worth gas-electricity complex in Viet Nam.
The investment plan was initiated
several years ago when Exxon Mobil discovered offshore gas reserves in central
Viet Nam. Exxon Mobil and PVN have jointly planned to build a 200ha
gas-electricity complex in the central region, using gas products from Lots
117, 118, and 119.
The Diplomat and the world were aware of ExxonMobil and
Vietnam plans
The Diplomat omission of Vietnam southern
power grid development is conspicuous.Three days before the CNBC posting, The Diplomat posted in China's Oil Rig Gambit: South China Sea
Game-Changer? Analysis, “China’s placement of a state-owned oil rig in the
South China Sea was unexpected, provocative and illegal. A second
interpretation posits that China’s actions were in response to the operations
by ExxonMobil in nearby blocks..This interpretation seems unlikely. ExxonMobil
has been operating in Block 119 from 2011. While China protested the award of
an oil exploration contract to ExxonMobil, China has not stepped up its
objections in recent months. It is also unclear how the placement of a Chinese
oil rig in Block 143 would deter ExxonMobil
from operating elsewhere. Finally, China’s actions appear to be disproportional
and very likely counterproductive. Block 143 does not directly affect U.S.
interests. Chinese interference with ExxonMobil would be a direct challenge to
the Obama administration’s statement that U.S. national interests included
“unimpeded lawful commerce.”
Rather than targeting an energy-rich
zone, Beijing is simply interested in pushing its neighbors as much as possible
to maximize the swath of sea it ultimately will control, experts told CNBC. In
effect, China is inserting a physical presence that gives it the upper hand
over wide ranges of territory and forces Vietnam to react defensively rather
than focus on its own expansions. While the CNBC analysis did not detail the “wide
ranges…(Chinese) forces” a blind man can see the Vietnamese national pipe line
is being targeted by the massive 90 ship HD-981 placement.
A large number
of People’s Liberation Army
troops have reportedly been spotted heading towards the China-Vietnam
border as tensions between the two countries continue
to escalate, reports Hong Kong’s Sing Tao
Daily. Sing Tao Daily is generally considered to be aligned to Chinese state
media.
While the
BBC and western news centers are still suggesting to their readership –“ It is a dispute
over territory and sovereignty over ocean areas and the Paracels and the
Spratlys - two island chains claimed in whole or in part by a number of
countries. Alongside the fully fledged islands, there are dozens of uninhabited
rocky outcrops, atolls, sandbanks and reefs, such as the Scarborough Shoal”
CNBC is breaking the media silence on the real issue of the current phase of
the China bold move into Vietnam waters. CNBC has jointed an emerging school of
thinking within the oil and gas industry that suggest China’s move is driven by
Chinese failure to develop deep sea energy and not the Paracels and the Spratlys.
The most remarkable aspect of the CNBC analysis is the critical discussion of
the China lack of deep sea pipe lines and China’s gross failure to find oil or
gas.CNBC.com
breaks press silence makes the economic gas pipe line connection to the current
crisis between Vietnam and China water war. According to CNBC.com posting What’s
really behind China's clash with Vietnam
Everett | @Ev
Rosenfeld
Thursday, 15 May 2014 | 10:54 AM
ETCNBC.com
According to the posting China is
years behind Vietnam in oil and gas
development of the South China Sea and faces major infrastructure problems even
if China were to strike oil or gas off the coast of Vietnam. Vietnam is
reaching the next critical phase of its development of gas and is developing
the Da Nang region as the next New York City in Asian. With a natural gas power
grid in Da Nang would make the region cleanest city in Asia and a power
emerging computer integrated manufacturing centers. The immediate key to Da
Nang economic growth is the use of gas from the ExxonMobil gas field from
blocks 117, 118, and 119 off Vietnam’s central coast in the waters administered
by Da Nang City, Quang Ngai Province, and Quang Nam Province.
In 2005 Vietnam built a 399-kilometer
underwater pipeline, the world's longest, began to carry natural gas onshore
from the Nam Con Son basin. The pipeline's anticipated capacity is 2 billion
cubic meters per year, while the basin has an estimated 59 billion cubic meters
of natural gas reserves. The Naw Con Son basin is the backbone of a national
oil and gas pipe line network moving energy to industrial locations in Vietnam.
The ExxonMobil gas field is phase three of this massive national Vietnamese
natural gas pipe line.
HD-981
placement is conspicuous
According to CNBC analysis-“ the
area near the Paracel Islands where China National Offshore Oil Corporation (CNOOC) has placed a rig, known as HD-981, is conspicuous
not for the oil and gas resources that lie there, but for the oil and gas that don't.
Rather than targeting an energy-rich
zone, Beijing is simply interested in pushing its neighbors as much as possible
to maximize the swath of sea it ultimately will control, experts told CNBC. In
effect, China is inserting a physical presence that gives it the upper hand
over wide ranges of territory and forces Vietnam to react defensively rather
than focus on its own expansions. While the CNBC analysis did not detail the “wide
ranges…(Chinese) forces” a blind man can see the Vietnamese national pipe line
is being targeted by the massive 90 ship HD-981 placement.
The CNBC goes on to said-“"[The
placement of HD-981 is] less about practically developing that specific block,
and more about the Chinese sending a calculated and pretty aggressive warning
to the Vietnamese that they aren't OK with the Vietnamese developing
there," said Ernest Bower, a Southeast Asia expert with the Center for
Strategic and International Studies.
But after years of planning to
exploit the oil and gas reserves in the South China Sea, CNOOC could hardly
have placed the rig in a less promising location. The area has less than 1
million barrels of oil equivalent in proved and probable reserves, economist
Alexander Metelitsa of the U.S. Energy Information Administration said in an email to CNBC. “
The CNBC analysis point out China
crisis-“The U.S. Geological Survey study "did not assess this part of the South China Sea
to have any significant oil or gas containing basins," Metelitsa said.
State-owned CNOOC has aggressively
moved forward with plans to get into the deepwater drilling business, said Kang Wu, vice chairman for
Asia at international energy consultancy Facts Global Energy. That
means stretching out into new territory.
"China has been [drilling]
offshore for many years, and they've been producing OK … but that kind of oil
is running out," said Wu. "If you want to expand your production
base, you have to go out."
CNOOC did not respond to CNBC's
request for comment. Ultimately, Bower does not expect that China will be in a position to set up a firm drilling operation so close to Vietnam's coast, as it would be expensive to set up a pipeline back to the Chinese mainland, and the cost of international criticism would be too great. China, however, may have gained more leeway for other deepwater operations with its recent move.
Vietnam, meanwhile, can hardly
afford to lose any of the reserves on its continental shelf. Although it was a
net petroleum producer as recently as 2010, its consumption numbers have
skyrocketed: It now consumes 413,000 barrels per day, compared with 352,000
produced, according to the EIA.
Despite previously designating two
hydrocarbon blocks in the area immediately around HD-981, state-owned
PetroVietnam has not made any public attempt to capitalize on the resources
there.
The critical question the CNBC
analysis leads it readership to but fails
to pose or answer is the strategic situational reality of the massive Vietnam
under water oil and gas pipe line system.
On January 24 in the head office of Vietnam's oil-and-gas group,
PetroVietnam in Hanoi, agreements were signed regarding implementing changes to
the Production Sharing Agreement (PSA) on blocks 05-2 and 05-3 on the shelf of
the Socialist Republic of Vietnam.According to the documents signed by Valery Gulev, managing director of Gazprom International, which is the single operator of foreign upstream-projects for Gazprom, and President of VNG PetroVietnam Do Van Hau, the Russian side becomes a duly authorized participant in these Agreements.
The signing ceremony was attended by Ambassador to Russia in Vietnam, Andrey Kovtun, Deputy Minister of Industry and Trade Le Duong Quang, Chairman of PetroVietnam's Board of Directors Phung Dinh Thuc, and representatives from the Ministry of Industry and Trade of Vietnam, VNG PetroVietnam, Gazprom International, joint operating company Vietgaaprom, and operating company Bieng Dong (subsidiary of PetroVietnam).
"Today's agreements will promote strategic cooperation between Gazprom and PetroVietnam at a new level. Gazprom is officially entering the exploitation process of these oil fields. Gazprom's inclusion in the project ensures the fulfillment of the operational schedule on blocks 05-2 and 05-3, where in June of this year we expect the first gas discharge," Do Van Hau said during the ceremony.
According to V. Gulev, out of more than 18 countries where Gazprom is currently working, Vietnam is one of the most favorable for doing business. The head of Gazprom International further assured that the company will do all it can to fulfill its responsibilities in the exploitation project for blocks 05-2 and 05-3.
REFERENCE
With a total area of 4342 cubic kilometers, blocks 05-2 and 05-3 are located in the southeastern part of the South China Sea, in the Southern Konshonsky oil-and-gas-bearing basin 300 kilometers from Vung Tau. The underwater gas pipeline Nam Con Son is in close proximity to the blocks. Two gas condensate fields are open within the blocks, Moc Tinh, 05-3, and Hai Tchach, 05-2 and 05-3, as well as one oil field, Kim Cuong Tay, 05-2. The ultimate reserves of the two gas condensate fields is measured at more than 55.5 billion cubic metres of gas and 25 million tonnes of gas condensate. In order to develop them, 16 exploitation wells with depths from 2000 to 4600 metres must be built.
PSAs on blocks 05-2 and 05-3 were signed in 1992. PetroVietnam acting on behalf of the government, signed the agreements -- for block 05-2 with BP and Norweigian Statoil; and for block 05-3 with the Japanese AEDC Vietnam Oil Development Co. and Teikoku Oil Co. As a result, the contents of the participants in the PSA changed, and by 2008 included PetroVietnam, BC ConocoPhilips and the Vietnamese PVEP. In 2009, contracting organizations announced their departure from the project, and to continue the work in PetroVietnam an operating company Bieng Dong was created.
On April 5, 2012, as part of the acting Agreement on Strategic Partnership between Gazprom and VNG PetroVietnam, an Agreement on Beginning the Project for Combined Exploitation of Blocks 05-2 and 05-2 was signed, according to which Gazprom receives 49% of the PSA under the conditions of the project implementation.
In April 2010, the State Expert Committee of Vietnam confirmed the plan for co-development of Hai Tchach and Moc Tinh. It's implementation will enable the assurance of the beginning of exploitation until the completion of the exploitation drilling and the development of fields, as well as the advance supply of gas in the main pipeline.
In April 1995, a 125-kilometer natural gas pipeline connecting Bach Ho with a power plant near Vũng Tàu went into operation. With the subsequent addition of compressors, the volume pumped rose to more than 1 billion cubic meters per year. In 2005 a 399-kilometer underwater pipeline, the world's longest, began to carry natural gas onshore from the Nam Con Son basin. The pipeline's anticipated capacity is 2 billion cubic meters per year, while the basin has an estimated 59 billion cubic meters of natural gas reserves.[12] Vietnam has 28 km of condensate pipeline, 10 km of condensate/gas pipeline, 216 of natural gas line, and 206 km of pipeline for refined products.
The block is being developed in three phases. The
first phase was completed in 2002-2003 and the Lan Tay field started production
in January 2003. The second phase was completed in 2008 and included installation
of compression facilities at the Lan Tay platform. The third phase consisted of
the development of the Lan Do field and drilling
of the fifth well on Lan Tay.
Nam Con Son project details and Phu My complex
"Block 06.1
produces about 30% of the nation's natural gas and condensate needs for power
generation."
The Lan Do field was developed as part of an
integrated gas-to-power project, the Nam Con Son Gas Project. Its development
cost more than $306.5m. Lan Do field compensates for the deteriorating output
from the Lan Tay. The estimated recoverable reserves at both the fields are
about six trillion cubic feet (tcf).
Offshore gas from both the fields is transferred to
onshore gas processing facilities and then to Phu My power complex through Nam
Con Son Pipelines (NCSP).
NCSP consists of a 362km long, high pressure
offshore subsea pipeline and a nine kilometre-long onshore pipeline. The
pipeline is owned by BP (32.67%), PetroVietnam (51%) and ConocoPhillips
(16.33%). The Lan Tay platform is also operated by TNK-BP.
TNK-BP ownership of the offshore gas field
The Russian oil company TNK-BP is equally owned by
BP and the AAR consortium, consisting of Alfa Group, Access Industries and
Renova. TNK Vietnam, a subsidiary of the BP Exploration Operating Company
Vietnam (TNK-BP), is the operator of the Lan Do field.
TNK-BP
acquired an additional 35% stake from BP in offshore Block 06.1 for $1.8bn, in
October 2010, to become its sole operator. The acquisition also included a
32.7% stake in the NCSP and Dinh Co Gas Process Terminal, along with a 33.3%
stake in the 739MW Phu My 3
power complex located in the Ba Ria-Vung Tau province. The Vietnamese Ministry
of Investment and Trade gave licence to the company to operate the offshore
gas Block 06.1, in October 2011.
Development and production from Vietnam's Block 06.1
Block 06.1 currently has a production capacity of
4.7bcm per annum. The Lan Do field will have a capacity to produce two billion
cubic metres (bcm) of gas a year. A 32-day subsea intervention
campaign was completed
at the Lan Tay field in November 2011 to facilitate production from Lan Do.
"The Russian oil
company TNK-BP is equally owned by BP and the AAR consortium, consisting of
Alfa Group, Access Industries and Renova."
TNK Vietnam successfully completed
drilling of two subsea development wells at Lan Do field in April
2012. The drilling works were started in January and took about 94 days for completion.
The two subsea wells are located at about three kilometres offset.
The two wells are tied
back to the existing Lan Tay offshore platform on the block. It is situated at
about 28km east of the Lan Do field in Block 06.1. The wells were connected to
the platform via a single 28km, 12-inch flow line and a control umbilical.
The Lan Do field flowed first gas through the
pipeline in October 2012. The wells were finished with a seven-inch tube to
increase gas recovery.
Reserves at the field are estimated to be 72-89
million barrels of oil equivalent (mmboe) of gas and 0.2-0.3 mmboe of
condensate. Lan Do is expected to have a maximum output of 175 millions of
standard cubic feet each day (mmscfd). It is also expected to have a life of 20
years.
Contractors for the Lan Do and Lan Tay gas fields
The two subsea wells (Lan Do-2P) were drilled using
the Ocean Monarch (UDW semisub) from Diamond Offshore. The engineering,
procurement and construction contract for subsea equipment and topside controls
for the field was awarded to FMC Technologies, in June 2010.
The fixed platform was fabricated by the company's
office in Singapore. Its service base is located in Labuan, Malaysia. The scope
of work included installation of two UWD-15 rigid lock wellhead systems, two
enhanced horizontal subsea tree (EHXT) systems and a topside controls master
control station (MCS).
FMC also provided rental installation workover and
control systems (IWOCS), production flowline tie-in systems, vertical jumper
kits as well as a Torus III connector. The subsea distribution systems include
one umbilical termination assembly (UTA), two subsea distribution units (SDU)
and electrical and hydraulic flying leads (EFLs and HFLs). The company was also
responsible for integration, testing, installation, maintenance and service of
the entire system.
The contract to supply the main and infield
umbilicals was awarded to Duco, a subsidiary of Technip. The value of the
contract was $18.6m. The umbilicals are based on Duco's hybrid technology.
Exxon Mobil (XOM)
is preparing to invest ~$20B in a gas-fired
power complex with Vietnam's state oil and gas group Petrovietnam.The project would involve construction of two power plants
with a combined capacity of 6K-6.5K MW, in a deal which could make the U.S.
one of the top four foreign investors in Vietnam along with Japan, South
Korea and Taiwan, according to the report. The US group Exxon Mobil has
accelerated the pace of its investment in the US$20 billion worth gas-electricity complex in
Viet Nam.
|
HA NOI (VNS)— The US group Exxon
Mobil has accelerated the pace of its investment in the US$20 billion worth
gas-electricity complex in Viet Nam. The Ministry of Industry and Trade noted that the group has completed site investigation and selection. Exxon Mobil was expected
to submit relevant documents and implementation plan to the Viet Nam National
Oil and Gas Group (PetroVietnam) and the ministry for approval.
The investment plan was initiated
several years ago when Exxon Mobil discovered offshore gas reserves in central
Viet Nam. Exxon Mobil and PVN have jointly planned to build a 200ha
gas-electricity complex in the central region, using gas products from Lots
117, 118, and 119. Half of the area will be used for building a 1,500MW power
plant. In the second phase of the project, the area will be expanded up to
200ha for building a 4,000-5,000MW power plant and gas processing facility. The
central Quang Ngai Province is emerging to be a viable destination for the
project. The province has recommended four locations some 75-85 kilometres from
the lots.
A representative from PVN was quoted
by the Tien Phong newspaper as saying that they were unable to announce
official information as it is a huge project with extremely high capital
demand. The sites are all in the Ca Voi Xanh (Blue Whale) platform, for which
PetroVietnam and its US counterpart signed a development deal during President
Truong Tan Sang's visit to the US last year. Vo Tien Dung, the head of
Management Board of the province's Dung Quat Economic Zone informed the
newspaper that Exxon Mobil and PVN have made efforts in choosing the site for construction.
Cao Khoa, the chairman of the
provincial People's Committee added that the province meets the requirements
set by the investors in areas, such as land, roads, electricity, and water. The
province also has the requisite port infrastructure to support the project.
The province has introduced the
proposed sites to Exxon Mobil and PVN, Khoa stated.
Khoa emphasised that any investors
interested in investing in the province will enjoy special preferential
treatment from the Government, adding that the province and the group had a
meeting and agreed on all the issues.
A
memorandum of understanding for the project was signed by the two parties
during Vietnamese State President Truong Tan Sang’s visit to the U.S. in July
2013.
The
American firm has finished a field survey to select a site for the gas-powered
complex and will probably place it in Quang Ngai Province. Exxon Mobil now pays
close attention to a location northeast of Vietnam’s sole oil refinery Dung
Quat, located in Binh Son District, although the province has introduced four
sites to the company, Dau Tu newspaper, a publication under the Ministry of
Planning and Investment, reported. The project is said to be fueled by gas
exploited from blocks 117, 118, and 119 off Vietnam’s central coast in the
waters administered by Da Nang City, Quang Ngai Province, and Quang Nam
Province.
Previously, Exxon Mobil and PVN sought a site
with a total area of about 200ha, half of which would be set aside for a 1,500
MW power plant in the first phase. In the second phase, 4,000-5,000 MW power
plants and a gas processing facility will be established there. Next month the
energy giant will share documents related to the project, including the
assessment of gas reserves, site selection, and an implementation plan with PVN,
and submit them to the trade ministry for consideration and approval, Tien
Phong newspaper said. Quang Ngai authorities have promised to offer special
incentives to the developers of the proposed project, suggesting they should
choose a location at the local 10,300-hectare Dung Quat Economic Zone.
They
also expressed hopes that the planned power complex would help transform the
province into a national oil refining hub.
The
ExxonMobil gas power plants will be fueled by gas exploited from blocks 117, 118,
and 119 off Vietnam’s central coast in the waters administered by Da Nang City,
Quang Ngai Province, and Quang Nam Province.
He praised Da Nang’s achievements during the past
three years, with its average annual GDP growth rate of 10 per cent and per capita
income of VND56 million (US$2,660), 1.6 times higher than the national average.Earlier
the same day, Trong visited TCIE Co.,
Ltd, an auto assembly joint
venture between Malaysia and
Japan – and the Hoa Tho
Veston factory. — VNS
China can not escape its deepening energy without peace with Vietnam
There is no scenario in which
China’s economy can escape the deepening energy crisis; it is in China
strategic long-term energy goals to allow Vietnam to peacefully develop deep
sea oil and gas, trading with Vietnam, as China trades with Saudi Arabia for
its share of Vietnam oil exports.
According to World View: U.S. Naval
Intelligence Chief Confirms Worst Fears of China's Military Buildup, by John J.
Xenakis. This concept of a
"short, sharp attack" is quite credible, as the Chinese people widely
believe that America has become weak because of the Iraq and Afghanistan wars,
and that, particularly under President Barack Obama, Americans have little will
to oppose China. Thus, they could quickly overwhelm Japan's forces, America
would do nothing, and Chinese ownership of the Japanese islands would be part
of the new status quo.
History has shown that this is a disastrous assumption.
CNBC analysis pathway to reality
The Diplomat dangerous analysis “When
China first announced the deployment of its oil rig, it stated that its
operations would terminate on August 15. This provides plenty of time for both
sides to orchestrate and manage the confrontation in Block 143 and provide a
face saving means for ending the confrontation”… This dangerous analysis failed
to account for the danger of new Chinese nationalism and its effects on the Beijing
military leadership and the political blow back effect of failing to find oil
or gas by the Chinese company CNOOC .
posted by Nubianobserver @ 2:03 PM
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