South China Sea Oil Rush Heightens Conflict Risk as U.S. Emboldens Vietnam

Vietnam and the Philippines are pushing forward oil and gas exploration projects in areas of the South China Sea claimed by China, risking clashes in one of the world’s busiest shipping corridors.

State-owned PetroVietnam’s partner Talisman Energy Inc. (TLM) aims to begin drilling next year in a block that China awarded to a U.S. rival and has protected with gunboats. Ricky Carandang, a spokesman for President Benigno Aquino, said the Philippines plans to exploit a field in an area of the sea where Chinese patrol boats harassed a survey vessel in March.

The neighbors of China, which has Asia’s largest military, were emboldened after the U.S. asserted interest in the waters last year, said James A. Lyons Jr., a former U.S. Pacific Fleet commander. A surge in crude prices to near $100 a barrel also spurred Vietnam and the Philippines to pursue the oil needed to meet economic growth targets of at least 7 percent this year.

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