PetroVietnam the state oil firm of Vietnam has cancelled its South China Sea oil drilling project and has thereby ordered Repsol the Spanish energy firm to cancel its Red Emperor project submitting to pressure by Beijing. This is the second time in last one year when Vietnam has scrapped a major oil project in the South China Sea due to pressure from China. The cancellation came at a crucial time when Repsol was at final stages of commercial drilling and a rig Ensco 8504 was to be sent from Singapore for the site. Thus, the cancellation has cost Repsol $200 million. No official statements have come from Repsol, PetroVietnam or the government.
Ca Rong Do field or Red Emperor site lies 440km off the city of Vung Tau and is a part of Block 07/03 in the Nam Con Son basin. It lies in close proximity to the nine-dash line which earmarks the line that China asserts to be its territory and thus the block thus overlaps its own oil concessions. The oil field has the potential to produce around 25000-30000 barrels of oil in a day.
The Spanish company had spent 33 million Euros on exploration in Vietnam last year. The Red Emperor was seen by Repsol as one of the major future projects. The work on the project had to start in 2019 as per the 384 million Euro rental contract.