Under a Triton Island JDA, Petrovietnam and China National Overseas Oil Company (CNOOC) would develop offshore oil and gas in the area together.
Both China and Vietnam support the concept of JDAs and cooperative development of energy resources in the South China Sea. For example, China and Vietnam have been jointly exploring for oil and gas in the Tonkin Gulf since 2014.
A Triton Island JDA would be located in the area explored by CNOOC’s high-technology oil and gas exploration rig Haiyang Shiyou 981 in 2014.
During that visit, a Chinese military flotilla disguised as fishing boats surrounded the exploration rig. This resulted in anti-Chinese riots in Vietnam.
Agreement by both China and Vietnam on a JDA around Triton Island area lowers the heat.
Vietnam gains economic activity from helping to service the JDA as well as from technology transfer from China. China gains new energy sources to feed its hungry economy.
Finding new South China Sea oil and gas supplies is a major priority for China. China’s largest offshore oil and gas field, Yacheng 13-1, lies roughly 200 kilometers northwest of Triton.
Gas from the Yacheng 13 field is pumped by subsea pipeline 800 kilometers to Hong Kong. There it produces the majority of Hong Kong’s electricity.
Yacheng 13-1 is running dry. While China is now developing smaller fields around Yacheng-13 with pipeline spurs, something bigger is needed. Triton could be that something.
Were China and Vietnam agree to a Triton Island JDA, two options appear sensible for getting the oil and gas to market.
The first would be to connect the Triton Island JDA to the existing Yacheng 13 pipeline. This could be done through building a subsea pipeline spur of roughly 300 kilometers — a manageable addition.
The second would involve piping Triton’s gas to Northern Vietnam’s Da Nang city over a similar distance. However, Northern Vietnam lacks an existing regional gas pipeline network. That, in turn, would mean consuming all the gas in and around Da Nang.
However, a greenfield terrestrial gas pipeline network could be constructed northward from Da Nang to Hanoi. The proposed pipeline could be laid alongside the eastern route of the proposed Kunming-Singapore Railway.
Concepts like this create a 1+1=3 outcome. Vietnam gets economic development, China gets infrastructure work. For its part, Hong Kong could just supplant ‘lost’ Yacheng gas with offsetting purchases of LNG.
Another possibility is for CNOOC and Petrovietnam, as joint development area partners in Triton Island, to coordinate more with other energy majors active in offshore northern Vietnam.
One potential third partner is Exxon. Exxon is developing the offshore ‘Blue Whale’ field between Triton and Da Nang and expects to lift its first gas from the field around 2021.
Exxon, CNOOC and Petrovietnam could share construction and use of subsea pipeline infrastructure, increasing capacity utilization and saving costs all around.
At present, Exxon plans to use Blue Whale’s output to service new gas-fired electricity power plans in and around Da Nang. An expanded North Vietnamese pipeline network would open up options for a more integrated market.
This infrastructure could be funded in part by China’s Asian Infrastructure Investment Bank (AIIB), integrating into a larger investment into the stalled Trans-ASEAN Gas Pipeline (TAGP). The TAGP is a decade-old proposal to link all of ASEAN’s members by a terrestrial and subsea gas pipeline network.
Joint Development Areas provide an opening to steer looming international conflict in the South China Sea away from nationalism and toward energy development. Ultimately, China’s South China Sea territorial stridency may be more about securing energy supplies than it is about territory.
Media reports tend to overlook this angle. In so doing, they make China’s actions in the South China Sea seem less rational than they are.
A gas pipeline would expand energy trade, a goal of both China and its Association of Southeast Asian Nation state neighbors. It would also provide the rationale for extend the scale of the Trans-ASEAN Gas Pipeline (TAGP) up the west side of the South China Sea.
This article was published at Grenatec.