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.