Critical Nubian Observer Review of Financial Times "China is stealing a strategic march on the US"

Nubian Observer Critical Review of Dangerous Financial Times of London Viet Nam Commentary

 The Chinese file

The US, Mr. Pilling of the Financial Times of London argues, has three possible responses to Beijing’s challenge. It can withdraw from Asia (highly unlikely and unnecessary, even from Beijing’s perspective); it can seek to maintain its primacy; or it can compromise. The choice is between “containment” and “appeasement”, two words loaded with negative connotations. China is seeking to prove to its neighbours that containment cannot work and that the US cannot be relied upon to defend them. If it can do so, they and Washington will have to acknowledge that the status quo is untenable. It is a dangerous strategy. It is also a clever one.

Another possible response the Nubian Observer suggests knowingly Mr. Philling omits, that is to support the right of South China Sea countries to develop their energy and China’s right to buy its share on the world market like Japan, South Korea, and the United States and Western Europe countries.

China saw its aggregate volume of natural gas imported from overseas jump 25 percent year on year in 2013, approaching one-third of its apparent consumption, a new report has showed. The country imported 53 billion cubic meters of natural gas last year, 31.6 percent of its domestic gas output plus imported volume, according to a report released by an economic and technological academy under China National Petroleum Corporation, the country's state-owned oil giant. In 2013, local authorities more strongly promoted the use of natural gas to reduce dependency on coal, prompted by the needs for environmental protection and economic advances. The drive contributed to the country's surging imports of natural gas, noted the report. Despite the increased imports, it said, "there would have been a supply-demand gap of 22 billion cubic meters in 2013 in the case that all the needs for natural gas were satisfied."China's natural gas consumption increased 13.9 percent year on year in 2013. The total consumption accounted for 5.9 percent of consumed primary energy resources, up from 5.4 percent in 2012, making China the world's third-largest gas user. Japan paid $68.98 billion last year for LNG 87.49 million tonnes last year; the Ministry of Finance said in preliminary trade figures.

If China imported all its natural gas from Viet Nam, at world market prices, China would face a net capital transfer of payment over 40 billion dollar annually to Viet Nam. As the share of natural gas increase so would the capital transfers to Viet Nam. Along with Japan and South Korea, Viet Nam would develop a market share of over a 150 billion dollar annual natural gas income, while its develops its own advanced gas centric power grid. The economic ripple economic effects would be in the hundreds of billions both in Viet Nam and the region allowing Viet Nam and other Asian supply chain economies to uncouple from the Chinese slave labor economy. This emerging reality is not lust to Beijing, Mr.Philling or the Financial Times of London, just selectively omitted in their either /or analysis between “containment” and “appeasement. Is it stupid to think Beijing might feel so kind of way about funding the economic uncoupling of Viet Nam and other Asian economies for its control? The Soviet Union felt the same way about the uncoupling East Germany and Central Europe.

 Summary

It is strategically dangerous to think China is neither stupid nor clever; Beijing is struggling with the great pain of being a super power that must learn to act in terms of the energy matrix of Asia and world peace, not giving into its own nationalistic tendencies. We have to support it becoming what it purports to be a super power among peaceful countries and help it avoid the nationalistic mistakes young super powers Germany and Japan made during WII. China is a nuclear power between an energy rock and hard place, trying to find its way as it learns to deal with ruthlessness of oil multinationals like ExxonMobil and the Middle East.

China’s energy crisis is causing critical retardations of its industrial and export economies. China is losing high energy-centric computer manufacturing to other Asian and American economies because of its overwhelmed power grids. The days of cheap Chinese energy that fueled their slave labor economy are ending. China, like other industrial countries is force to adjust to the emerging energy nightmare. With 80 per cent of China’s energy flooding into manufacturing, China’s energy adjustment is harder than other advanced Asian countries.

China national energy crisis has created a distorted filter of strategic reality. Such is the case with Beijing perception of the emergence of Viet Nam in general and its energy sector in particularity. Taking the Ca Voi Xanh field by force will not address or solve China energy crisis, any more than the United States taking Mexico oil and gas fields in the Gulf of Mexico.

Another possible response is to support the right of South China Sea countries to develop their energy and China’s right to buy its share on the world market like Japan, South Korea, the United States and Western Europe countries.

Mr. Pilling and the Financial Times of London editorial board should show a little more respect for  the sitting President of the United States name Obama and the high value his place on Chinese life and his patience with Beijing leadership brinkmanship. As in the case of Great Britain war with Germany, if and when the red line is crossed, Beijing and the Chinese military will feel the full force and might of the American notion of worth for human life.

 The critical review

The Nubian Observer would ask Mr. Pilling is an attack on a UNS ship worth war or how about seizer of the ExxonMobil 8 trillion cf natural gas field of Ca Voi Xanh near by the Chinese naval worth a war. History says yes, Japan military planners viewed BP and Standard Oil of New Jersey Asian holdings were worth doing Pearl Harbor! German planners viewed Rumanian and Soviet oil in the same light. Why should Chinese military planners think any differently? It is strategically dangerous to think China is neither stupid nor clever, even in light of history’s examples.

The world can see by the 5,000 naval seamen Beijing is so willing offering up to Vietnamese missiles as human bait, what little value the PLN place on human worth. Elements within Beijing leadership are falling into the false matrix of a narrow energy driven foreign policy, like Germany and Japan leadership did in the late 1930’s. This false energy matrix is at the expense of the strategic reality of the emerging new world order that China is a key member.

It is strategically dangerous to think China is neither stupid nor clever; Beijing is struggling with the great pain of being a super power that must learn to act in terms of the general good of Asia and world peace, not giving into its own nationalistic tendencies. We have to support it becoming what it purports to be a super power among peaceful countries and help it avoid the nationalistic mistakes that a young super power Germany and Japan made during WII. China is a nuclear power between an energy rock and hard place, trying to find its way as it learns to deal with ruthlessness of oil multinationals and the Middle East and Russians.

China would be hard pressed to dictate the terms of any “joint development” it so often purports to seek with ExxonMobil and other major energy companies who control the critical technologies and infrastructure cards, particularly as the oil and gas discoveries move into deeper waters. Beijing attempt to impose its will on the situation before the typhoon season set itself up for a major high profile public failure or military solution.

The real asymmetric game move is that fact Viet Nam and ExxonMobil need only set back; handle their business of building a stronger deterrent and wait on the typhoon season and the face saving strategic retreat of the Chinese naval force until next drilling season.

May 28, 2014 In the Financial Times of London, David Pilling, in China is stealing a strategic march on the US frame the critical question of what is worth the United States going to war with China, but runs away from the real question on informed people’s minds, i.e. why is China is over focus on to the point of offering thousands of seamen as human bait in order to take ExxonMobil Viet Nam oil and gas field.

Mr. Pilling suggest “To preserve the status quo, the US needs to prevent every one of China’s moves, something it has been unable to do. China needs merely to pick a few small battles that it knows the US has no wish to fight. An air defence identification zone here. An oil rig there. Of course, Mr. Obama could draw a red line. But, as he found out in Syria, red lines can be tricky.”

Mr. Pilling said “Bit by bit, then, Beijing is creating new facts on the ground, or rather in the sea and in the air. With each new incident, it is throwing down the gauntlet. Is it worth fighting for a Vietnamese fishing boat? Thought not. The Nubian Observer would ask Mr. Pilling is an attack on a UNS ship worth war or how about seizer of the ExxonMobil 8 trillion cf natural gas field of Ca Voi Xanh near by the Chinese rig worth a war. Japan military planners though BP and Standard Oil of New Jersey Asian holding were worth doing Pearl Harbor!

“Is China being stupid? Or is it being really clever? That in a nutshell is the foreign policy debate over Beijing’s seemingly concerted effort to provoke its neighbours. The case that China is being stupid is easy to make. In recent weeks Beijing has picked simultaneous fights with Vietnam, the Philippines and Japan. It moved an oil rig near Chinese-controlled islands claimed by Hanoi, triggering anti-Chinese riots in Vietnam in which four people died. This week a Chinese fishing boat, part of a large flotilla around the rig, was accused of sinking a Vietnamese fishing boat”. Why does Mr. Pilling fear critical commentary about Chinese designs on the natural gas field of Ca Voi Xanh oil and gas field right near the Chinese rig? Mr. Pilling knowns the oil rig placement is about the ExxonMobil oil and gas field, not about islands. Why is this subject remains off limits in the Chinese or western press, particularly the leading financial journal in the world. Even the lowly Wall Street Journal provides depth analysis of the relationship of the two locations in the East Vietnamese Sea. Is this the Mr. Obama red line Beijing fears crossing for fear of provoking a real fight with a force that may defeat it?

Nowhere in Pilling 1,000 word political essay is there any mention of ExxonMobil oil and gas field or the planned 20 billion dollar gas fed power plants near Da Nang or the pipe line now within  range of the Chinese oil rig naval missile force. Just one of the ExxonMobil’s Viet Nam field locations are reported to have almost 8 trillion cf of natural gas or 12 years of Chinese natural gas consumption. ExxonMobil has made more new gas discoveries within the Ca Voi Xanh field and other places. Could the massive Chinese naval deployment be connected to the Ca Voi Xanh field? These questions appear too provocative for the Financial Times of London editorial board to allow Mr. Pilling to address in his analysis to inform its readership.

The world can see by the 5,000 naval seamen Beijing is so willing offering up to Vietnamese missiles as human bait, what little value the PLN place on human worth. Elements within Beijing leadership are falling into the false matrix of a narrow energy driven foreign policy, like Germany and Japan leadership did in the late 1930’s. This false energy matrix is at the expense of the strategic reality of the emerging new world order that China is a key member. Prof White wrote a book with the self-explanatory title The China Choice: Why We Should Share Power .

The US, Mr.Pilling argues, has three possible responses to Beijing’s challenge. It can withdraw from Asia (highly unlikely and unnecessary, even from Beijing’s perspective); it can seek to maintain its primacy; or it can compromise. The choice is between “containment” and “appeasement”, two words loaded with negative connotations.

Another possible response the Nubian Observer suggest is to support the right of South China Sea countries to develop their energy and China’s right to buy its share on the world market like Japan, South Korea, the United States and Western Europe countries.

China is seeking to prove to its neighbours that containment cannot work and that the US cannot be relied upon to defend them. If it can do so, they and Washington will have to acknowledge that the status quo is untenable. It is a dangerous strategy. It is also a clever one.

Professor White matrix is old cold war construct that has not application to emerging interpedently world order.  As the Apple Computer iPad and the global Internet clearly demonstrate, the nation/state matrix is a dangerous false reality. The global computer integrated supply chain is not a nation/state construct and places emphasis on worldwide participation in subcomponent manufacturing. Energy is a subcomponent of the same supply chain.

As stated above, China national energy crisis has created a distorted filter of strategic reality. Such is the case with Beijing perception of the emergence of Viet Nam in general and its energy sector in particularity. Taking the Ca Voi Xanh field by force will not address or solve China energy crisis, any more than the United States taking Mexico oil and gas fields in the Gulf of Mexico.

Mr. Pilling and the Financial Times of London editorial board should show a little more respect for  the sitting President of the United States name Obama and the high value his place on Chinese life and his patience with Beijing leadership brinkmanship. As in the case of Great Britain war with Germany, if and when the red line is crossed, Beijing and the Chinese military will feel the full force and might of American notion of worth for human life.

It is strategically dangerous to think China is neither stupid nor clever; Beijing is struggling with the great pain of being a super power that must learn to act in terms of the general good of Asia and world peace, not giving into its own nationalistic tendencies. We have to support it becoming what it purports to be a super power among peaceful countries and help it avoid the nationalistic mistakes young super power Germany and Japan made during WII. China is a nuclear power between an energy rock and hard place, trying to find its way as it learns to deal with ruthlessness of oil multinationals like ExxonMobil and the Middle East.

At this critical moment in Asian history, the Financial Times of London, purportedly the leading financial journal in the world would be better serve its readership by a critical essay on China’s energy crisis and the Ca Voi Xanh oil field, rather another shallow and dangerous commentary on the power politics of a war that should never happen. James Manicom analysis in The Energy Context behind China’s Drilling Rig in the South China Sea is a starting point of contexture understanding of the Ca Voi Xanh oil field development issue. According to The Energy Context behind China’s Drilling Rig in the South China Sea, “ In the current case, even if the Haiyang Shiyou 981 makes a significant discovery, the commercial viability of that discovery hinges on getting the product to market. These costs increase dramatically with distance and the technological challenges associated with laying pipelines in deep water. The nearest Chinese gas pipeline network is on Hainan island, and water depths would make accessing that network very costly. The most sensible market for the product is Vietnam, which would be loath to pay China for resources it views as its own. These conditions suggest that China’s intent, in addition to exercising its jurisdiction in claimed waters, is also intended to dictate the terms of the “joint development” it so often purports to seek.

The Nubian Observer suggest energy planners from Chinese, Vietnamese, Russian, Indian ExxonMobil and critical Middle East investors knew for many years lack of oil and gas infrastructure limited the Chinese leverage. Only a massive scale oil and gas field with a pipe line network scaled like the one currently moving gas from the Ca Voi Xanh gas field would provide the economics of scale to pipe oil and gas to southern China even if oil and gas was discovered. This infrastructure location and development reality is critical to the emergence of Viet Nam energy industry and the flow of foreign capital to the country. China would be hard pressed to dictate the terms of any “joint development” it so often purports to seek with ExxonMobil and other major energy companies controlling the critical technologies and infrastructure, particularly as the discoveries move into deeper waters. Beijing attempt to impose its will on the situation before the typhoon season set itself for a major high profile public failure or military solution.

The real asymmetric game move is that fact Viet Nam and ExxonMobil need only set back and wait on the typhoon season and the face saving strategic retreat of the Chinese naval force until next drilling season.

The Financial Times article Text

May 28, 2014 5:47 pm

China is stealing a strategic march on the US

By David Pilling

Bit by bit Beijing is creating new facts, and with each incident, it throws down the gauntlet

Is China being stupid? Or is it being really clever? That in a nutshell is the foreign policy debate over Beijing’s seemingly concerted effort to provoke its neighbours. The case that China is being stupid is easy to make. In recent weeks Beijing has picked simultaneous fights with Vietnam, the Philippines and Japan. It moved an oil rig near Chinese-controlled islands claimed by Hanoi, triggering anti-Chinese riots in Vietnam in which four people died. This week a Chinese fishing boat, part of a large flotilla around the rig, was accused of sinking a Vietnamese fishing boat.

Prodding at Manila’s maritime claims – whether by building artificial islands or seeking to control fishing grounds – has also turned the Philippines against China. After kicking the Americans out of the Subic Bay naval base in 1992, Manila has now asked them to come back. During President Barack Obama’s recent swing through Asia, it signed an agreement to allow US ships and aircraft to use its bases.

China has also antagonised Japan. By flooding disputed areas in the East China Sea with aircraft and boats, it is challenging Japan’s administrative control of the disputed Senkaku Islands, known as Diaoyu by Beijing. That has given Shinzo Abe, the rightwing prime minister, all the excuse he needs to press for a reinterpretation of Japan’s pacifist constitution. Mr Abe wants Japan to be able to fight in defence of its allies. Japan’s more assertive stance, far from troubling its neighbours, has been welcomed by many. Tokyo is supplying the Philippines with coastguard boats and has promised to do the same for Vietnam. In short, China appears to have scored an own goal by driving its neighbours into each other’s arms. All trace of China’s smile diplomacy has vanished.

Brad Glosserman of the Center for Strategic and International Studies finds it “inexplicable” that Beijing would stir up such trouble. Why would it do that, he asks in The National Interest magazine, when it faces so many potentially explosive economic and social problems at home? Mr Glosserman thinks Deng Xiaoping, who said China should “hide its brightness, nourish obscurity”, would be spinning in his grave. But Deng’s exhortation implied that China should bide its time, not that it should bury its ambition for all eternity.

Asean is divided between countries that have disputes with China and ones that do not

Hugh White, professor of strategic studies at Australian National University, has an alternative view. He argues that China’s manoeuvres should come as no surprise. After all, Xi Jinping, its increasingly assured president, has called for a “new model of great power relations”. That means it wants to be treated not as a US subordinate but as an equal, at least in the western Pacific. “These things are inherently zero-sum, so for China to have more power and influence, America must have less,” he writes in The Interpreter, a blog run by Australia’s Lowy Institute. To bring that about means undermining US authority by picking small, but winnable, fights.

This is not an immovable object and an unstoppable force. The game is asymmetric – as indeed are China’s military capabilities. (It cannot match US aircraft carriers but it may be able to sink them with missiles.) To preserve the status quo, the US needs to prevent every one of China’s moves, something it has been unable to do. China needs merely to pick a few small battles that it knows the US has no wish to fight. An air defence identification zone here. An oil rig there. Of course, Mr Obama could draw a red line. But, as he found out in Syria, red lines can be tricky.

Bit by bit, then, Beijing is creating new facts on the ground, or rather in the sea and in the air. With each new incident, it is throwing down the gauntlet. Is it worth fighting for a Vietnamese fishing boat? Thought not. How about a submerged Philippine reef? An uninhabited island? In the short term, such tactics may well prod neighbours to stick together or cling ever closer to US skirts. But if China is changing regional perceptions, and realities, that may not matter. There is talk, for example, of a more united stance by members of the Association of South East Asian Nations. For now it is just that. Talk. Asean is divided between countries that have disputes with China – the Philippines, Indonesia and Vietnam among them – and ones that do not, including Thailand and Cambodia. Concerted action looks a long way off.

Prof White wrote a book with the self-explanatory title The China Choice: Why We Should Share Power . The US, he argues, has three possible responses to Beijing’s challenge. It can withdraw from Asia (highly unlikely and unnecessary, even from Beijing’s perspective); it can seek to maintain its primacy; or it can compromise. The choice is between “containment” and “appeasement”, two words loaded with negative connotations.

China is seeking to prove to its neighbours that containment cannot work and that the US cannot be relied upon to defend them. If it can do so, they and Washington will have to acknowledge that the status quo is untenable. It is a dangerous strategy. It is also a clever one.

 

 

 

 

 

 

 

 

The idealized Political economy of Chinese control of the massive Ca Voi Xanh field

The idealized Political economy of Chinese control of the massive Ca Voi Xanh field

Nubian Observer analysis

The distance as between the cities of New York City and Philadelphia

The official distance between the Chinese first rig and Viet Nam is about the same distance as between the cities of New York City and Philadelphia. The distance between the ExxonMobil Viet Nam Ca Voi Xanh oil and gas field and Chinese naval forces of 137 ships is less than the distance between Princeton and Philadelphia. Advanced elements of the Chinese task extend almost 50 nautical miles toward the Vietnamese main land. Unknown numbers of Chinese submarines are positions off the coast of Viet Nam ready to attack Vietnamese cities.

A Russian made BrahMos missile less than five minutes flight time from Vietnamese land missile batteries to the Chinese taskforce. Both the Vietnamese and Chinese navies off the coast of Da Nang are armed with deadly cruise missiles able to strike each other within a few minutes.

The Chinese fleet is reaching the Beijing political point of no return, without going to the ExxonMobil Viet Nam Ca Voi Xanh oil and gas field.

There is a de facto blackout western press discussion or reporting of the distance between the two Chinese oil rig naval taskforces and the ExxonMobil Viet Nam Ca Voi Xanh oil and gas field which is less than a half day sail and is being shortened by new Chinese navy deployments. The New York Times, Wall Street Journal, Financial Times of London, Reuters, the Times of Japan and other western newspaper maintain a de facto ban on connecting the Viet Nam/China energy stand off to the ExxonMobil Viet Nam Ca Voi Xanh oil and gas field that is kept under the press radar screen. Most every other aspect of the Chinese naval forces is revealed in detail. Because of this critical omission by media design, Americans understanding of the emerging strategically changing situation remains time and distance distorted.

Beijing is struggling to connect the Iraq crisis to Viet Nam because Chinese energy policy is increasing driven by reactionary nationalism and proud. “I do believe that China is not backing down from its claim,” Dennis McCornac, a professor at Loyola University Maryland in Baltimore, told Thanh Nien News.“ To do so would invite shame so they are playing more the role of the bully." The Nubian Observer suggest that Beijing near term goal of the second oil rig deployment less of a nationalist sides how and more of a calculated resource grab, i.e. the ExxonMobil Viet Nam Ca Voi Xanh oil and gas field. With the Viet Nam navy by design, in port, the only means of resisting the physical seizer of the oil and gas field is a massive Vietnamese missile strike.

 China thinks there is massive oil and gas in Viet Nam water, ExxonMobil is not saying anything

The Ca Voi Xanh 2X well is reported to have encountered a significant hydrocarbon accumulation, comprised of between 4 and 7 trillion cubic feet (TCF) of recoverable gas, plus possibly some oil. Its location, shape and depth remain above top secret ExxonMobil data. No one really knows just how large the oil and gas field is or where it start and ends. Be design, ExxonMobil has left the most of blocks 118 and 119 underdeveloped in order to keep China away. ExxonMobil is investing 20 billion dollars in two gas powered industrial plants to power 40 per cent of southern Viet Nam using block 117. China is trying to take the massive Ca Voi Xanh field that may reach between block 117, 118 and 119 for its own use. Rather than pay 10 to 15 dollars a unit for natural gas at world prices, like Japan and South Korea, China could reduced its energy bill by over a trillion and half dollars a year by taking Viet Nam natural gas by force. As important, China would effectively slow the process of Viet Nam uncoupling its economy form Beijing control and linking itself to more advanced Japan, South Korea, Europe and the United States advanced manufacturing supply chain members.

The first step in the Chinese master plan take over process was moving easy missile target oil rigs and naval escorts right in Viet Nam face daring the country to fight a war it can’t hope to win with a country 14 times its population size, with no nukes or operational submariners to defense it with.

When the Chinese oil rig was deployed to Viet Nam, 137 Chinese ships were also deployed, many missiles armed daring Viet Nam to come out and fight. Most main stream news report on the island issue or the rig, few talk about the 137 ships, unknown number of submariner, some nuclear armed and Chinese fighter jets. Since the private talks with ExxonMobil have collapsed, Beijing has deployed five more oil rig with naval escorts to the South China Sea to bail Viet Nam. American still know very little about the strategic important of the Viet Nam Ca Voi Xanh oil and gas field. Just the 7 trillion cubic feet (TCF) of natural gas current being developed by ExxonMobil in blocks may have is enough natural gas to fuel the most advanced eastern regions and cities of China for the next 10 to 15 years. More importantly, Viet Nam may have enough natural gas to fuel the economies of the South China Sea, Japan and South Korea, aiding their transition to gas based power grid, leaving China economically way behind. The Da Nang region is the most effective location to process and refined natural gas and soon oil for the whole East Asian industrial region. This is why the growing Chinese naval taskforce is stationed off the coast of Da Nang, Viet Nam. Da Nang is where the massive undersea gas pipe line comes ashore to processing and refinement plants.

The Chinese Rue

Beijing is baiting the Vietnamese military with easy oil rig and large in order to provoke a missile attack as a pretext for a war with Viet Nam in order to take the massive Ca Voi Xanh field  and maybe the Da Nang oil and gas complex. China has no interest in another 100 million most poor farms to take care of; Beijing is struggling to deal its own billion poor people and the tens of millions of North Koreans.

“On 2nd May 2014, the China National Offshore Oil Corporation (CNOOC) positioned the drilling rig HD-981 in a location of 15°29’ North latitude, 111° 12’ East longitude, approximately 120 nautical miles from Vietnam’s waters, within the exclusive economic zone and continental shelf of Vietnam. CNOOC’s action violated Vietnam’s sovereign and jurisdiction rights under the 1982 United Nations Convention on the Law of the Sea.

 On 4^th May 2014, PetroVietnam has sent a letter to the President and CEO of CNOOC strongly opposing the action and resolutely demanding that the Corporation cease the illegal actions immediately and move the HD-981 drilling rig out of Vietnam’s waters.

 The above action of CNOOC was against the cooperative spirit between the two national oil and gas groups, practice of international oil activities as well as the motto of friendship and cooperation between Vietnam and China.

 “It is about 120 nautical miles east of Vietnam’s Ly Son Island and 180 nautical miles south of China’s Hainan Island—the two nearest features that indisputably generate a continental shelf. As such, it not only sits on Vietnam’s claimed extended continental shelf, but also well on the Vietnamese side of any median line that might be negotiated between the two shelves from the Chinese and Vietnamese coasts, as indicated by the white lines in the map below.”

CSIS argues that China’s action violates UNCLOS (parties should not jeopardize or hamper the reaching of a final agreement) and the 2002 Declaration on the Conduct of parties in the South China Sea, signed by ASEAN countries..

Beijing is trying to force ExxonMobil hand by playing on its greed

In a calculated new naval threat Beijing is trying to force ExxonMobil into agreeing to jointly develop the Ca Voi Xanh oil and gas field while appearing to sale out the Vietnamese national interest in exchange for no war and massive region profits under Chinese military protection. Beijing is offering ExxonMobil a deal, once China takes the Ca Voi Xanh oil and gas field, to jointly develop it under Chinese control. The political economy problem for China is the rest of Asian is far more important to ExxonMobil long term energy planning, giving the collapsing Chinese export economy. That is, computer integrated manufacturing is moving out of China and into other Asian countries like Viet Nam. Those countries are positioning to replace China critical valued added component supply chain. The abandonment of China by Apple and other advanced computer integrated manufacturing is not a micro moment, it a general trend, energy is only one element.

Beijing is trying to bait Hanoi into a missile attack with the deployment of five new oil rigs with naval task forces near or in striking distance of the ExxonMobil Viet Nam Ca Voi Xanh oil and gas field. Beijing is playing a military chess game with Vietnamese and ExxonMobil strategic planners hoping for a wrong move, so the Chinese can start a war. Each of the now six oil rigs have a naval component, some large and some small, all are designed create pressure on Vietnamese outer borders. Only two Chinese oil rigs are really looking for oil and gas, these two rigs are moving closer and closer to the ExxonMobil blocks 117,118 and 119.

The nine-dash line

The Nubian Observer suggests that if Viet Nam can resist being baited, the Chinese oil rigs taskforce will first move into the western most end of block 142 and 143 searching for evidence of a gas-prone structure. If they find one, the hold political matrix will change and Beijing will deploy all its rigs to the region to develop oil and gas over the coming years. If the two oil rig failed to find evidence of a gas-prone scaled oil and gas, which is likely the case, then Beijing may elect to forcibly take up positions in the Chinese tips of block 118 and 119 near the critical China's so-called nine-dash line, a boundary Beijing uses on its official maps to show its claim to 90 percent of the South China Sea and continue to search for oil and gas  looking for the outer limits of the Nam Ca Voi Xanh oil and gas field during the tycoon season or go home and come back next year leaving a sea based naval outpost on station.

 Having failed to located scaled oil or gas, Beijing will be faced with public humiliation and forced to either retreat or push on the ExxonMobil oil and gas hoping to pick up a tail of a oil and gas extending back to the nine-dash line. Beijing will have no political pretext to employ. The moment of truth will upon them to make a strategic decision about naked aggression and war. Chinese satellites know where the ExxonMobil oil and gas is and the distance to the nine-dash line from the oil and gas field. The nationalistic element within Beijing leadership will mount a serious political struggle to seize the field, once near it in force. The world will be watching the whole affair.

 The Vietnamese coastguard  will be compression into the ExxonMobil blocks and the approaches to the blocks will be mined and a few Chinese ships maybe have be sank by mines and other Vietnamese counter means. Viet Nam and ExxonMobil will pressure the White House to physically place a small USN force between in the Nam Ca Voi Xanh oil and gas field as Viet Nam declares a military zone around the field. A larger theatre force of US, Japan, South Korean and maybe Australia forces will be massed on standby as the Da Nang regional defense is layered.

As the first elements of the China naval taskforce moves to the western end of blocks 142 and 143 the first and second “Hold Your Breath” moments happened with deployment of the first and second Chinese oil rig naval taskforces to the Da Nang region of Viet Nam setting the real time conditions for a war between Viet Nam and China. The deployment of the five Chinese oil rigs following formal meetings in Beijing between ExxonMobil CEO and Chinese oil leadership suggests a Harding of ExxonMobil position about not sharing the Viet Nam Ca Voi Xanh oil and gas field. The second wave of five rigs deployment evidence the powerful nationalism element within Beijing leadership, even in the face of the Iraq crisis, which is not accounted for in Professor Farley or other analysis. Beijing has made it clear, if all else fails, seizing the ExxonMobil Viet Nam Ca Voi Xanh oil and gas field is a military option. While ExxonMobil is an international corporation and not a US aircraft carrier, it political roots are American and the White House has made it clear, its business interests will be defended by US military force, if necessary. Short of ExxonMobil attacking Chinese naval forces, the United States and ExxonMobil are inextricably locked in the Middle East and Pacific Rim’s system of international trade.

Looking a gas-prone structure

According  to western media suggest Vietnam isn't expected to react strongly to the placement of the second rig because it lies far to the north of the politically sensitive waters surrounding the Paracel Islands, where ships from the two countries have been ramming each other for more than 40 days near the first oil rig. The border between China and Vietnam in the area of the second rig near the mouth of the Tonkin Gulf has never been properly demarcated, despite five rounds of talks on the matter.

Exxon CEO Rex Tillerson and CNOOC Group Chairman Wang Yilin met in Beijing on May 14, the Chinese company said on its website, adding they discussed “further cooperation” between the two energy giants. It gave no specific details. The meeting was de facto blacked by the western press and remains off limits for even RT.com political review. Only the Japanese main stream  media, i.e. the Japan Times and Standard have politically connected the dots of the Chinese rigs deployments to the  energy rich ExxonMobil Viet Nam Ca Voi Xanh oil and gas field in a systemic way.

Neither ExxonMobil, the CNOOC Group nor CNPC could not be reached for comment on the rig or the field despite repeated attempts. However, a Chinese oil industry official with knowledge of the field said a CNPC team that surveyed the block had told him the potential was “pretty good,” based on data collected over a 10-year period. “But of course we won’t know the exact amount of reserves until we drill,” added the official, who declined to be identified because he was not authorized to discuss the matter with the media. The Chinese are hoping that the energy rich ExxonMobil Viet Nam Ca Voi Xanh oil and gas field extends well in blocks 118, 119 and 120. In that case, China could legally force Viet Nam and ExxonMobil to share the oil and gas with them.

Low risk of China finding oil or gas, buy what if they do

Experts said if the rig found commercial reserves, China would bring in platforms for production and pipe-laying ships to build the infrastructure to transfer gas to vessels. That process could take several years, while production could last decades. Following the May 14, 2014 ExxonMobil Beijing talks, a second rig naval taskforce is in route to the region and purportedly a third and fourth rigs are being ready for deployments. Each will feature Chinese submariner protection. The rig lies approximately 330 km east of Vietnam and 370 km from the southern coast of Hainan, just below the Paracel Islands, a chain occupied by Beijing and claimed by Hanoi. Earlier this week, the rig was moved after having been some 20 nautical miles closer to central Vietnam’s coast.

The rig lies about 330 kilometers east of Vietnam and 370km from the southern coast of Hainan. It is just below the Paracel island chain occupied by China and claimed by Hanoi.

Hanoi has said the Haiyang Shiyou 981 rig is in its exclusive economic zone. China says its biggest and most advanced mobile energy platform is operating within its waters.

Vietnam has two fields to the left of the rig, much closer to its coast, where US giant Exxon Mobil discovered oil and gas in 2011 and 2012.

A part of Vietnam's Blocks 118 and 119 fall within China's so-called nine-dash line, a boundary Beijing uses on its official maps to show its claim to 90 percent of the South China Sea.

"The place where the rig is drilling at the moment is likely to be a gas field. China conducted three-dimensional geological surveys before moving the rig there," said Wu Shicun, president of the National Institute for South China Sea Studies, a Chinese government think-tank on the southern island of Hainan.

"China is pretty confident ... otherwise they wouldn't start drilling," added Wu, a leading expert on China's ambitions in the South China Sea.

No production had taken place in Blocks 118 and 119, Do Van Khanh, head of state-run PetroVietnam Exploration Production Corporation, told Reuters. He declined to discuss the rig.

In a 2013 report, the U.S. Energy Information Administration, a government agency, said geological evidence suggested the Paracels themselves did not have significant potential in terms of conventional hydrocarbons.But near the islands the chance of making a major gas discovery was high because there had been several gas finds already in the area, said James Hubbard, head of Asia oil and gas research at investment bank Macquarie in Hong Kong. “It’s not a huge leap of faith to think they might be targeting a gas-prone structure,” he said.

The Chinese are starting from the Paracels and working south toward the ExxonMobil oil and gas field searching for the northern end of the energy rich ExxonMobil Viet Nam Ca Voi Xanh oil and gas field which may lay within block 118 and 119.

Chinese discovery of scale energy either oil or gas is a political game changer
“The tensions between the two sides will absolutely rise to the top if China finds oil in that area,” said Duong Danh Dy, a former Vietnamese diplomat. “There will be more collisions, more conflict. I would not exclude armed conflict.”

In another political mistake, Beijing has deployed a second oil rig to the waters off the coast of Viet Nam, only weeks before the tycoon season removing any question of finding oil or gas in the region before next year. So why the second oil rig now? Beijing is clearly increasing the political and military pressure on Viet Nam for a missile exchange.

Iraq, cause to slow Chinese move on the energy rich ExxonMobil Viet Nam Ca Voi Xanh oil and gas field

The U.S. reserve can hold the equivalent of about 95 days of imports, while China’s can probably now cover about 21 days, according to estimates by Amrita Sen, a London-based analyst with Energy Aspects Ltd., a research company.

Purchases for China’s strategic supply will pull 200,000 to 300,000 barrels a day of crude from the global market this year, CEBM Group, an independent investment advisory firm based in Shanghai, said in a March research note. Iraq is China’s fifth-largest overseas oil supplier, behind top producer Saudi Arabia (which last year provided 19 percent of the country’s 5.6 million barrels a day), as well as Angola, Oman, and Russia. Over the last five years, state-owned oil and gas giant China National Petroleum has rapidly expanded its presence in the Iraqi oil business. CNPC is now operating four projects in the as-yet-untouched southern part of the country, making it the single biggest foreign investor in Iraq.

Last year, CNPC produced 299 million barrels from Iraq, almost one-third of its overseas output.  Meanwhile, Chinese state enterprises, refiner Sinopec and offshore player CNOOC, have both made big investments in Iraq’s oil industry.

Increase Chinese imported oil from Iraq and Iran was a strategic key to Beijing not having to deal with pro Viet Nam Saudi Arabia. One of the economic blow back effects of the collapsing Iraqi government is the reduction of long term oil from Iraqi to provide almost six million bpd to China. Now China is forced to turn to the Saudis and ExxonMobil for help. The Saudis may use the oil weapon to stop Beijing from starting a war with Viet Nam.

The distance as between the cities of New York City and Philadelphia

The deployment of a second Chinese rig naval task force does not change the energy situation, but shorten the logistical distance between Chinese forces and the energy rich ExxonMobil Viet Nam Ca Voi Xanh oil and gas field to hours, the most strategic energy field in the East Sea claimed by both Viet Nam and China and developed by ExxonMobil. A Russian made BrahMos missile less than five minutes flight time from Vietnamese land missile batteries to the Chinese taskforce. Both the Vietnamese and Chinese navies off the coast of Da Nang are armed with deadly cruise missiles able to strike each other in seconds.

The official distance between the rigs and Viet Nam is about the same distance as between the cities of New York City and Philadelphia. The distance between the ExxonMobil Viet Nam Ca Voi Xanh oil and gas field and Chinese naval forces of 137 ships is less than the distance between Princeton and Philadelphia. Advanced elements of the Chinese task extend almost 50 nautical miles toward the Vietnamese main land. Unknown numbers of Chinese submarines are positions off the coast of Viet Nam ready to attack Vietnamese cities.

Within this massive kill zone are USN ships and submariners are mixing.

According to a statement posted on the website of China’s Maritime Safety Administration, the rig will be towed between June 18 and June 20 and is currently 104 nautical miles northeast of Da Nang (Vietnam's central hub) and 60 nautical miles from China’s Hainan Island. The Chinese posting is careful not to inform the reader just how near the rig to the ExxonMobil Viet Nam Ca Voi Xanh oil and gas field which is directly between the Chinese 137 ships and Da Nang 104 nautical miles or 10 hours at 10 mph or five hours at 20 mph sail. A 1,000 mph cruise missile can reach a target in less than six minutes.

The missile distance between Vietnamese shore missile batteries and the Chinese force is less than five minutes flight time.

As stated above, there is a de facto blackout western press discussion or reporting of the distance between the two Chinese oil rig naval taskforces and the ExxonMobil Viet Nam Ca Voi Xanh oil and gas field which is less than a half day sail and is being shortened by new Chinese navy deployments. The New York Times, Wall Street Journal, Financial Times of London, Reuters, the Times of Japan and other western newspaper maintain a de facto ban on connecting the Viet Nam/China energy stand off to the ExxonMobil Viet Nam Ca Voi Xanh oil and gas field that is kept under the press radar screen. Most every other aspect of the Chinese naval forces is revealed in detail. Because of this critical omission by media design, Americans understanding of the emerging strategically changing situation remains time and distance distorted.

Beijing is struggling to connect the Iraq crisis to Viet Nam because Chinese energy policy is increasing driven by reactionary nationalism and proud. “I do believe that China is not backing down from its claim,” Dennis McCornac, a professor at Loyola University Maryland in Baltimore, told Thanh Nien News.“ To do so would invite shame so they are playing more the role of the bully." The Nubian Observer suggest that Beijing near term goal of the second oil rig deployment less of a nationalist sides how and more of a calculated resource grab, i.e. the ExxonMobil Viet Nam Ca Voi Xanh oil and gas field. With the Viet Nam navy by design, in port, the only means of resisting the physical seizer of the oil and gas field is a massive Vietnamese missile strike.

Beijing is trying to bait Hanoi into a missile attack

In a calculated new naval threat Beijing is trying to bait Hanoi into a missile attack with the deployment of a second oil rig naval task force near the ExxonMobil Viet Nam Ca Voi Xanh oil and gas field. Western media suggest Vietnam isn't expected to react strongly to the placement of the second rig because it lies far to the north of the politically sensitive waters surrounding the Paracel Islands, where ships from the two countries have been ramming each other for more than 40 days near the first oil rig. The border between China and Vietnam in the area of the second rig near the mouth of the Tonkin Gulf has never been properly demarcated, despite five rounds of talks on the matter.

By Chinese tactical design, the second oil rig naval will force Viet Nam to increase the size and composition of its naval blocking force. The Vietnam naval force between the two Chinese naval groups blocking the southern approach to the Ca Voi Xanh oil and gas field will be exposed to Chinese high speed end around flanking and encirclement. Both Chinese task forces have The Type 52C Haikou has been hailed as the "Chinese Aegis" as it is said to have similar capabilities to US destroyers equipped with the Aegis system. The Haikou is equipped with eight YJ-8 Chinese anti-ship missiles, though most of its weapons systems are geared towards defense, with a four-array AESA multi-function phased array radar for 360-degree coverage. This is designed to limit the impact of Da Nang missile batteries and increase the survivability of the Chinese naval forces for counter strikes. In addition, Zhang Lisong, the political commissar serving aboard the Liuzhou, a PLA Type 054A guided-missile frigate, told the Global Times that large naval bases and floating facilities like the Haiyang Shiyou 981 rig are seen as easy targets for enemy forces.

"40% of the losses in naval warfare history took place at the anchor site because warships or other facilities are too large to evade enemy fire," said Zhang, "Besides; it takes at least 20 minutes for them to be fully operational."

Zhang said that enemy forces can use their special divisions such as frogmen to launch an effective attack as these forces or small-size mobile boats are extremely hard to be spotted. To combat the threat of Vietnamese frogmen, China has introduced the Russian-built 55mm DP-65 remotely controlled antidiversion grenade launching system. Zhang added that the People's Liberation Army should also set a defense perimeter around the rig to prevent unknown vessels or submarine from getting too close.

 Unknown numbers of Chinese submariners are already positioning in back of the Vietnamese coastguard forces, posed to seal the encirclement. Chinese ships have already encircled Vietnamese ships in small groups. The deployment of the second Chinese oil rig naval task force sets the preconditions for the entrapment of a major Vietnamese coastguard force by Chinese naval forces, baiting a Vietnamese missile attack.

On the very day that a top Chinese diplomat arrived in Vietnam to discuss the dispute over the Chinese oil rig deployed in Vietnamese waters, Beijing announced it was towing yet another rig into what the rest of the world calls the South China Sea.

According to a statement posted on the website of China’s Maritime Safety Administration, the rig will be towed between June 18 and June 20 and is currently 104 nautical miles northeast of Da Nang (Vietnam's central hub) and 60 nautical miles from China’s Hainan Island.

Analysts say that by deploying these rigs, China seek to reinforce what it believes is its legitimate operation in the resources- and oil-rich East Sea.

“I do believe that China is not backing down from its claim,” Dennis McCornac, a professor at Loyola University Maryland in Baltimore, told Thanh Nien News". To do so would invite shame so they are playing more the role of the bully."

McCormac believes that the confrontation at sea is designed to distract a domestic audience from news of flagging economic growth and traumatic news of violent attacks by militant Islamic minority groups.

Other analysts say China's recent move is less of nationalist sides how and more of a calculated resource grab.

This camp believes that China appears to be marking out areas for exploration that are legally and practically convenient given their proximity to the China National Offshore Oil Corporation bases and infrastructure on Hainan Island--where the state-owned oil company can both supply and protect its rigs.

“That is perhaps why Vietnam has been singled out by China, despite efforts Hanoi has made in recent years to mend fences and pursue cooperation,” said Euan Graham, a maritime analyst with Singapore's Nanyang Technological University.

The Nubian Observer suggests the second jig deployment is a pretext to move the Chinese naval task force into strategic position near the ExxonMobil Viet Nam Ca Voi Xanh oil and gas field  for an overnight seizer.

Saudis warning China to back off Viet Nam

The lust of Iraq oil exports will force China to turn to the Saudis for increased shipments. Saudi Arabia is warning China about its brinkmanship toward Viet Nam in term Beijing and Tehran can understand. It is Saudi own interests that China not be allow to take the ExxonMobil Viet Nam Ca Voi Xanh oil and gas field  and the Saudis have the oil weapon to enforce their political will.

Saudis warning to Iran to not meddle in Iraq is a clear message to Beijing to also back off threading Viet Nam. As the final supplier of oil to China and only country able to replace Iraq oil exports, Saudi Arabia holds the oil  weapon that shapes the standoff between Viet Nam and China.

(Reuters) - Saudi Arabia gave an apparent warning to arch enemy pro Chinese Iran on Wednesday by saying outside powers should not intervene in the conflict in neighboring Iraq.

Foreign Minister Prince Saud al-Faisal also said Iraq was facing a full-scale civil war with grave consequences for the wider region.

His remarks coincided with an Iranian warning that Tehran would not hesitate to defend Shi'ite Muslim holy sites in Iraq against "killers and terrorists", following advances by Sunni militants there.

The toughening of rhetoric about Iraq by the Gulf's two top powers suggested that Tehran and Riyadh have put on hold recent plans to explore a possible curbing of their rivalry across the region's Sunni-Shi'ite sectarian divide.

Peace seeking leaders around the world have been working behind closed doors to reason with Beijing leadership in terms of the consequence of a war with Viet Nam. A possible break through is emerging in Iraq that may cause Beijing to rethink it brinkmanship in the East Sea with Viet Nam. A war with Viet Naw would potentially collapse world energy market and play right into the hands of the Islamic State of Iraq and al-Sham. China’s Iraqi oil imports would be at serious risk alone with the central government.

According to Wall Street Journal: The Iraq Debacle

An extended civil war is likely. A terrorist caliphate is possible.

The magnitude of the debacle now unfolding in Iraq is becoming clearer by the day, with the terrorist army of the Islamic State of Iraq and al-Sham, or ISIS, marching ever closer to Baghdad. On Tuesday the al Qaeda affiliate captured Mosul, a city with a population greater than Philadelphia's, a day later it took Tikrit in the Sunni heartland, and on Thursday ISIS commanders announced they plan to attack the Shiite holy cities of Najaf and Karbala.

No one should underestimate the danger this presents to the stability of the region and to America's national and economic security. An extended civil war seems to be the best near-term possibility. More dangerous is ISIS's ambition to establish a Muslim caliphate in the heart of the Persian Gulf, which would mean a safe haven for Islamic terrorism that would surely target the U.S. The danger to Iraq's oil exports of three million barrels a day is already sending prices up and global equities down.

The threat to Baghdad is real and more imminent than is widely understood. Four Iraqi divisions have melted away before the 3000-5,000 ISIS force, which is gaining deadlier weapons as it advances. One source says Iraqi soldiers who are supposed to protect Baghdad are dressing in civilian clothes beneath their military uniforms in case they have to flee. Iraq's air power, such as it is, could soon be grounded if civilian contractors are endangered.

The danger to Iraq's oil exports of three million barrels a day is already sending prices up and global equities down. China is importing over a million barrels a day from southern Iraq and is growing concern because it has no military forces on the ground in order to control oil flow out of the country.

A Viet Nam thing for thing, Beijing asking the White House and ExxonMobil for help

China has privately turned to the United States and ExxonMobil for military force to ensure its critical oil exports from Iraq, will China back off Viet Nam? China imports almost 50 per cent of Iraq oil exports which are produced in part by ExxonMobil and other oil majors China is struggling with in the South China Sea. The Iraq crisis has created the face saving political thing for thing Beijing leadership needs to control the nationalistic elements within its military to provoke a Viet Nam military confrontation.

There was little China can do to immediately bolster the Iraqi government and protect their interests, despite aid it has offered to Baghdad in the past. The Saudis will not allow Chinese military boots on the ground in Iraq. "The situation shows how mixed up the geopolitics of the Mideast and oil have become," said Daniel Yergin, the vice chairman of research group IHS and a noted oil historian. "This time, the U.S. and China and Iran are all on the same side, trying to preserve the Iraqi state - each of them with their own interests, and all of them unprepared and caught by surprise," he said. China had asked Iraq's government to ensure the safety of Chinese people in the country, Hua said, though she did not say if any there had been any effect on Beijing's oil interests there. State-run China National Petroleum Corporation (CNPC), China's biggest oil and gas producer, has three projects in Iraq, in the country's south and southeast. Most of Iraq's oil drilling and export facilities are in the south, where al Qaeda-inspired groups have little support. They are not expected to be as vulnerable to insurgents as infrastructure in northern Iraq.

According to the New York Times “Still, Iraq plays an important role for market stability. With current production of 3.3 million barrels of oil a day, Iraq is the second-largest producer in the OPEC cartel, and it has the potential to become a far larger player on the world stage. Current predictions by the International Energy Agency show Iraqi production growing to 4.4 million barrels a day in 2015 and to nearly 6 million barrels a day by 2020.

That kind of growth will require large amounts of foreign investment to resuscitate Iraqi oil fields that were poorly maintained for decades under the Saddam Hussein regime. The Western oil giants ExxonMobil, BP, Royal Dutch Shell, Occidental Petroleum and Chevron have plowed significant resources in the southern Iraqi fields and the Kurdistan region of northern Iraq. They also have the skilled talent and expertise that Iraq needs and cannot always get from Chinese and other non-Western oil companies investing in the area.

 

 

Where the Chinese oil rigs are really going to and more importantly why? 7/1/2014

Where the Chinese rigs are really going to and more importantly why? 7/1/2014

Nubian Observer status report

According to the Institute for Security and Development Policy  “It has been suggested in the international media, in this regard, that China's positioning of CNOOC 981 (also referred to as HYSY981) near the Paracels on May 2 could be, in part, linked to Vietnam's 2013 announcement of its intention to build a US$20 billion power plant to be supplied by oil and gas from Vietnamese Blocks 118 and 119, which are adjacent to where CNOOC 981 is deployed. As for the Philippines' latest stated intentions in Reed Bank, it is unclear if Beijing would, in the short term, retaliate by having CNOOC announce its own plans to develop this area. Given, however, those Chinese vessels have in the past disrupted Forum Energy's operations there, they will most likely do so again if operations resume”.

The description

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.

Then things changed.

Following Beijing meetings between Chinese state owned oil and gas majors and ExxonMobil in June, Beijing leadership ordered the deployment of five more oil rig naval protected  and missile armed groups to waters off Viet Nam. Beijing also order the first oil rig taskforce to moving through block 142 and 143 toward the ExxonMobil owned and operated Viet Nam Ca Voi Xanh oil and gas field. The forward elements of the first Chinese oil rig taskforce is within 100 miles of the Viet Nam Ca Voi Xanh oil and gas field.

According to The Diplomat, “Diplomatic sources in Beijing also report that CNOOC officials revealed they were ordered to place the rig in Block 143 despite their misgivings on commercial grounds. CNOOC officials pointed to the costs of keeping the rig on station until mid-August when oil exploration is scheduled to cease. Other observers point out that the prospects of finding commercial reserves of oil and gas in this area is quite low”.

So why has Beijing deployed four oil rig naval taskforces with hundreds of ships and submarines?

Charlie Zhu  of Reuter suggest: Experts said if the rig found commercial reserves, China would bring in platforms for production and pipe-laying ships to build the infrastructure to transfer gas to vessels. That process could take several years while production could last decades. The four oil rigs are already deployed and can brought to the ExxonMobil owned and operated Viet Nam Ca Voi Xanh oil and gas field within days, if not weeks.

Status report

Currently the massive Chine oil rig missile armed naval escort of 137 ships is slowly making course via block 142 and 143 toward the massive and strategic ExxonMobil blocks 118 and 119 south of Da Nang, Viet Nam into a Vietnamese missile kill zone. Viewers can track its progress on Google Maps. A resisting Vietnamese Coast Guard naval force of 40 ships is being compressed against the Vietnamese’s coast losing critical tactical space. Currently, the rig is 240 km (126 miles) off the Vietnam’s coast and 330 km (206 miles) from the southern coast of China’s Hainan Island. More importantly, the Chinese naval taskforce is less than a 100 miles from the ExxonMobil Viet Nam Ca Voi Xanh oil and gas field.

High speed Chinese missile ships in the advanced elements of the Chinese taskforce are within four hours sail time of the ExxonMobil Viet Nam Ca Voi Xanh oil and gas field. Unknown numbers of Chinese missile armed submariners are embedded with the taskforce. The eastern most part of Vietnam’s Blocks 118 and 119 fall within China’s so-called nine-dash line, a boundary Beijing uses on its official maps to show its claim to 90 percent of the South China Sea.

Few western military analyses have allowed their readership  insight into China’s military doctrine in terms of the energy war with Viet Nam in the East Sea, near the ExxonMobil Viet Nam Ca Voi Xanh oil and gas field.

According to Reuters, China optimistic of finding gas off Vietnam, could test ties further – experts, Wed May 28, 2014, Charlie Zhu outlined the Chinese strategic goals in the oil rig development mystified by most main stream media. He even frame the context of a potential war: But near the islands the chance of making a major gas discovery was high because there had been several gas finds already in the area, said James Hubbard, head of Asia oil and gas research at investment bank Macquarie in Hong Kong.

"It's not a huge leap of faith to think they might be targeting a gas-prone structure," he said.

Indeed, Vietnam has two fields to the left of the rig, much closer to its coast, where U.S. giant Exxon Mobil Corp discovered oil and gas in 2011 and 2012.

A part of Vietnam's Blocks 118 and 119 fall within China's so-called nine-dash line, a boundary Beijing uses on its official maps to show its claim to 90 percent of the South China Sea. The controversial line extends deep into the heart of maritime Southeast Asia.

Soon after Exxon made its announcement about Block 118 in 2011, China warned foreign energy companies against exploration in disputed areas. It did not name Exxon.

No production had taken place in Blocks 118 and 119, Do Van Khanh, head of state-run PetroVietnam Exploration Production Corporation, told Reuters. He declined to discuss the rig.

In a statement, Exxon said it was in talks with Vietnamese authorities about the feasibility of developing central Vietnam's natural gas resources. It did not respond to questions about the possible impact from China's exploration nearby.

Exxon CEO Rex Tillerson and CNOOC Group Chairman Wang Yilin met in Beijing on May 14, the Chinese company said on its website, adding they discussed "further cooperation" between the two energy giants. It gave no specific details.

A DECADE OF SURVEYS

Neither CNOOC Group nor CNPC could be reached for comment on the rig or the field despite repeated attempts. An executive at China Oilfield Services Ltd , the service arm of CNOOC Group and the rig's operator, declined to give details on drilling results so far.

But a Chinese oil industry official with knowledge of the field said a CNPC team which surveyed the block had told him the potential was "pretty good" based on data collected over a 10-year period.

"But of course we won't know the exact amount of reserves until we drill," added the official, who declined to be identified because he was not authorised to discuss the matter with the media.

Experts said if the rig found commercial reserves, China would bring in platforms for production and pipe-laying ships to build the infrastructure to transfer gas to vessels. That process could take several years while production could last decades.

"The tensions between the two sides will absolutely rise to the top if China finds oil in that area," said Duong Danh Dy, a former Vietnamese diplomat.

"There will be more collisions, more conflict. I would not exclude armed conflict."

Chinese military doctrine revealed

Chinese military doctrine is based on a Maoist application of Clausewitz notion "War is simply the continuation of political intercourse with the addition of other means. The Nubian Observer analysis deliberately use the phrase "with the addition of other means" because we also want to make it clear that Beijing views a war with Viet Nam in the larger frame work of the Chinese Century doctrine and control of the South China Sea economy via direct control of its oil and natural gas.

Chinese Century doctrine in itself does not suspend political intercourse or change it into something entirely different. Japan and South Korea are critical elements of Chinese near term planning. Rather, Beijing seeks to increase the regional dependency on China’s political economy. In this idealized Beijing Clausewitz context, Beijing seeks to integrate ExxonMobil blocks 117,118 and 119, with Chinese de facto blocks 142 and 143. The Da Nang oil and gas processing infrastructure is a secondary goal of Chinese energy planning. With direct control of trillion of cubic feet (TCF) of strategic South China Sea natural gas, Beijing hopes to create a new layer of asymmetric  control of the  regional political economy in particular Japan and South Korea.

China saw its aggregate volume of natural gas imported from overseas jump 25 percent year on year in 2013, approaching one-third of its apparent consumption, a new report has showed.

The country imported 53 billion cubic meters of natural gas last year, 31.6 percent of its domestic gas output plus imported volume, according to a report released by an economic and technological academy under China National Petroleum Corporation, the country's state-owned oil giant.

The political economy of uncoupling Viet Nam economy from China

If Viet Nam provided Chinese gas imports under free market conditions China would pay Viet Nam 60 billion dollars a year and in five years these payments would be almost a 100 billion dollars annually, in addition to 120 billion dollars Viet Nam would get from Japan and South Korea. Viet Nam would invest these funds in the construction of a modern industrial economy seeking to uncouple it’s self where possible from the Chinese slave economy dependency.

Regional energy free of Chinese control retards China’s goal of economic integration under its hegemony. Viet Nam is setting the stage for economic uncoupling of critical other supply chain partners in Asian from Chinese hegemony.

The development of the ExxonMobil discounted gas power grids in southern Viet Nam is allowing Japan, South Korea and other multinationals to relocate critical value added computer integrated component manufacturing from their home countries and China to southern Viet Nam. This transplantation process threatens to set the stage for economic uncoupling of critical supply chain partners across an increasing range of value added components in Asian. Chinese soaring cost of energy does not allow Chinese manufacturing to compete with Vietnamese energy discount component manufacturing.

The soaring cost of fuel imports let Japan to post a record annual trade gap of 11.47 trillion yen ($112.06 billion) in 2013, up from 6.94 trillion yen in the previous year and a third straight year of deficit. LNG imports increased 0.2 percent to 87.49 million tonnes last year, the Ministry of Finance said in preliminary trade figures on Monday. Japan, the world's top importer of liquefied natural gas (LNG), paid a record 7.06 trillion yen ($68.98 billion) last year for LNG, overturning a previous record in 2012.

In December, Japan imported 8.09 million tonnes of LNG, up 4.9 percent from a year earlier and the highest since January 2013.

The share of natural gas in Japan’s TPES increased significantly from 17% in 2010 (before the March 2011 earthquake) to 22% in 2011, due to growing demand from the electricity generation sector. Japan’s demand for natural gas steadily increased from some 26 billion cubic meters (71 mcm/d) in 1980 to around 109 bcm (298.6 mcm/d) in 2010, to 124 bcm (340 mcm/d) in 2012. Japan’s domestic natural gas production is limited – with production of around 3.3 bcm in 2012.South Korea is the second-largest importer of liquefied natural gas in the world behind Japan. The Korean government predicts overall natural gas demand to grow about 1.7% annually until 2035 according to its proposed long-term energy plan, as the fuel remains a significant source of cleaner energy for the country.

Viet Nam gas is a key element in both Japan and South Korea gas security.
Chinese control and development of Viet Nam Ca Voi Xanh oil and gas field will position China to sale 120 billion dollars of natural gas to Japan and South annually, while limiting relocation of critical value added computer integrated component manufacturing from their home countries and China to southern Viet Nam.

Beijing’s necessity for of control of Viet Nam Ca Voi Xanh oil and gas field is located in the frame work Chinese energy hegemony within the region, not just in the Chinese power grid or dislike of Vietnamese politics. It is within this neo Maoist application of Clausewitz notion "War is simply the continuation of political intercourse with the addition of other means Beijing locates an energy war with Viet Nam and ExxonMobil. The understanding of the economic imperative driving Beijing, frames the ruthless of the current military conflict between Hanoi and Beijing.

The South China Sea is the most dangerous place on earth and Beijing has increased the danger by posting thousands of seamen in a known Vietnamese missile kill zone as political bait to justified war.

A Maoist application of Clausewitz notion would suggest China show force, but allow Viet Nam to develop its oil and gas industry, while Beijing handles the immediate problem of Iraq oil supplies and new energy from Iran and Russia. Viet Nam is not going anywhere, nor is China’s energy problem. The fear of Viet Nam will look different in a few years after China locates its own Ca Voi Xanh oil and gas field.

The problem is with over 130 ships and submarines deployed to defend Chinese oil and gas fields, what is the political face saving reason to retreat? Viet Nam and ExxonMobil are hoping the Chinese do not find a reason to stay. It is Tycoon season.