Beijing harasses Petronas and Shell off Malaysia

[Tom Kirkman + 8,860]

China causing trouble again.  What a shock, I know.  The Covid-19 panic-o-rama is providing a perfect cover for all sorts of political shenanigans. 

"Never let a crisis go to waste" ... especially if you created the crisis in the first place, apparently.

“Everything under heaven is in utter chaos; the situation is excellent." ~ Mao Tse-Tung

Side note, last year I've met the author of this article, and before that we had discussed SE Asia oil & gas politics on numerous occasions.  He lives in SE Asia and is very much aware of the area's oil & gas political scene.

 

Beijing harasses Petronas and Shell off Malaysia

A four-month long standoff over oil and gas operations in the South China Sea is intensifying between Malaysian, Chinese, and Vietnamese ships, though all three governments have managed to keep it out of the public eye, until very recently.

At issue are two oil and gas fields that Malaysia’s state-owned Petronas is exploring on the extended continental shelf claimed by both Kuala Lumpur and Hanoi. In mid-April, the face off drew in US and Australian war ships, heightening tensions in the area, where IOCs, such as Shell, also have stakes in oil and gas projects.

The saga started in December, when a Seadrill-operated drillship, the West Capella, contracted by Petronas, moved to Block ND2, exploring an oil and gas field called Lala-1. It was operating beyond Malaysia’s 200-nautical-mile exclusive economic zone in an area that both Malaysia and Vietnam claim as part of their extended continental shelves, reported the Asia Maritime Transparency Initiative (AMTI).

The waters in this area are also claimed by China through its sweeping claim to most of the South China Sea within its U-shaped ‘nine-dash line’, which is not recognised by its neighbors or internationally by The United Nations Convention on the Law of the Sea.

Nevertheless, in late December, China, as well as Vietnam, sent ships to shadow the West Capella in the deep-water blocks ND1 and ND2 off the Malaysian state of Sarawak. China, in particular, responded with a campaign of intimidation against the drillship, which resulted in a “dangerous, ongoing game of chicken involving law enforcement, militia, and civilian vessels,” AMTI said in an analysis.

The harassment spilled over to other Malaysian oil and gas work closer to shore, including Blocks SK308 and SK408 operated by Shell and Sapura Energy, respectively, said AMTI.

Moreover, the prolonged standoff underscores “the new normal in the South China Sea: that new energy development by Southeast Asian states anywhere within the nine-dash line will be met by persistent, high-risk intimidation from Chinese law enforcement and paramilitary vessels,” warned the AMTI.

Significantly, the uptick in coercive activities by Chinese vessels against Malaysian oil exploration is likely linked to Kuala Lumpur’s decision to submit a continental shelf claim in December 2019, Hugo Brennan, an Asia analyst at geopolitical risk consultancy Verisk Maplecroft, told Energy Voice.  China opposes the move on the basis that it challenges its own South China Sea claims, added Brennan.

“With the world distracted by the COVID-19 pandemic, and a new and unstable government in power in Kuala Lumpur, Beijing likely senses an opportunity to more assertively pursue its geopolitical interests,” said Brennan.  ...

 

... As AMTI points out, the Malaysian government seems determined to continue exploring the disputed waters north of Sarawak. But “China’s response sends a message that actual production of oil and gas in Blocks ND1 and ND2 would be prohibitively risky for any commercial actor, including Petronas,” added the AMTI.

It is unknown how much recoverable oil and gas is in the disputed Malaysian blocks at the center of the face off. But if China continues to thwart all future exploration and development activities then Petronas could struggle to boost output and much needed investment off Sarawak, which is home to the Bintulu LNG export complex. This would limit the expansion in production needed to help maintain lucrative hydrocarbon exports, which earn important government revenues.

 

[James Regan + 1,776]

Tom it was one of our clients units involved , we had someone onboard at the time, I will try and get some coal face info, maybe interesting hear what the boys thought and what if anything was done.

[Tom Kirkman + 8,860]

Thanks James.  If you get info from someone on board, I'll relay it back to the author for a follow-up / update.

I seriously doubt that the newly formed government in Malaysia, or Petronas, or Shell, or local players, will actually be able to do anything to halt China's deliberate intimidation.

China is one of Malaysia's biggest trading partner's, and China uses that clout to hush up political tension within the 9 dash line South China Sea disputed region.

Once again, I believe the South China Sea needs to be officially renamed the South Asia Sea.  Words have power and meaning.