Rosneft, a Russian oil firm stated that drilling in the disputed South China Sea by Rosneft was carried out within Vietnam territorial waters and is in accordance with Vietnam law despite claims to the area by China.

Rosneft Vietnam BV, a Vietnam unit of Rosneft, had raised concern that the recent drilling in the contested area would anger China, according to sources who talked to Reuters.

China’s Foreign Ministry spokesman, Lu Kang warned that no country, company, or individual can carry out oil and gas exploration or exploitation activities in waters under Chinese jurisdiction without Beijing’s permission.

“We urge relevant parties to earnestly respect China’s sovereign and jurisdictional rights and not do anything that could impact bilateral relations or this region’s peace and stability,” Lu stated.

In March, Vietnam halted drilling activity in a nearby block of the South China Sea dubbed the “Red Emperor” reportedly due to pressure from China. The block is licensed to Spanish energy giant Repsol which is seeking compensation from Vietnam.

The South China Sea conflict: Why is it being disputed by six countries?

In 1947, when China was under the rule of the Kuomintang Party (the Nationalist Party), China made a territorial claim over the South China Sea. At that time, the Kuomintang Party created a demarcation line called the “eleven-dash line” which became today’s nine-dash line.

Based on this claim, China controlled most of the sea, including Pratas Island, the Macclesfield Bank and the Spratly and Paracel island groups that were obtained from Japan after the end of the World War II.

Vietnam argued that China had never claimed the Spratly and Paracels island groups before the 1940s. Hanoi claimed that it had controlled both islands since the 17th century and had several supporting documents.

The Chinese Communist Party excluded the Tonkin Bay area from the Kuomintang-made “eleven-dash line” in 1953. The party simplified the map by changing it to a “nine-dash line.”

However, China’s claim has been disputed by the neighboring countries. The Philippines, Taiwan, Brunei, Vietnam, and Malaysia compete with China over territorial claims in the South China Sea.

Why is the South China Sea so important?

The South China Sea is perhaps the single most significant shipping channel in the world. Almost two-thirds of South Korea’s energy supplies, nearly 60 percent of Japan’s and Taiwan’s energy supplies, and 80 percent of China’s crude oil imports pass through the South China Sea.

The oil transported through the South China Sea is triple the amount that passes through the Suez Canal and fifteen times the amount that transits the Panama Canal.

The South China Sea is also home to abundant oil and natural gas reserves. According to the U.S Energy Information Administration (EIA), the area contains oil reserves of 11 billion barrels and natural gas reserves of up to 900 trillion cubic feet.

Will the South China Sea dispute ruin Beijing-Moscow ties?

Russia is China’s largest supplier of oil and gas and China has become Russia’s main export destination. The growing close relationship between the two countries has forced China to refrain from pressuring Moscow over Rosneft’s drilling. But will Rosneft’s drilling in waters claimed by China, push China too far?

“Although Russian diplomats have privately expressed concerns to their U.S. counterparts that China may one day put pressure on Moscow to terminate those projects, so far Beijing has refrained from doing so because of the ever-closer strategic partnership between the two countries,” said Ian Storey, a regional security expert at Singapore’s ISEAS-Yusof Ishak Institute.

Has the unpredictability of U.S. foreign policy fostered a stronger relationship between China and Russia? Perhaps the South China Sea is a testing ground for the strength of that relationship.

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