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Vietnam and Russia expand joint South China Sea gas projects

Dmitry Medvedev held talks with Prime Minister of Vietnam Nguyen Xuan Phuc

by Nikkei Asian Review

HANOI — Vietnam and Russia are working more closely together on gas development projects in the South China Sea?as they seek to?reduce their dependence on trade with China.

Locked in a bitter territorial dispute with China over islands in the area, Vietnam is trying to insulate itself from economic pressure by its giant neighbor. Russia, whose economy has been pummeled by Western sanctions, is also trying to avoid becoming too dependent on economic ties with China.

But cooperation between Vietnam and Russia to develop resources in the South China Sea could trigger a fierce backlash from Beijing.

Earlier in November, Russian Prime Minister Dmitry Medvedev traveled to Hanoi for talks with his Vietnamese counterpart, Nguyen Xuan Phuc. The two reaffirmed their countries’ commitment to joint natural gas development projects in the South China Sea and other forms of economic cooperation. They also agreed to double bilateral trade to $10 billion by 2020.

At the meeting, local media reports said Phuc took a thinly veiled swipe at China’s naval expansion in the South China Sea, saying countries should try to settle issues peacefully, while respecting international law. Medvedev was reported as supporting Phuc’s call.

Vietnam’s state-owned?oil company?PetroVietnam and Russian state-controlled natural gas producer Gazprom have agreed to jointly develop?gas in fields on the continental shelf in the South China Sea. But the project has been on hold due to strong protests from China, which claims most of the vast body of water and has been building military facilities in the area.

Russia is pursuing closer relations with Vietnam to establish a foothold in Southeast Asia. “We hope that these ties will strengthen,” Medvedev said of the cooperation between the two oil companies. “To achieve that, we will create favorable conditions for implementing joint and new projects involving Gazprom, Zarubezhneft [another Russian state-controlled oil company], PetroVietnam and other companies.”

Any projects involving the two countries are bound to irritate Beijing, which is vigorously pressing its sovereignty claims in the South China Sea.

Russia is not a major trading partner for Vietnam, accounting for less than 1% of its total trade. But Vietnam has become increasingly uneasy about its heavy reliance?on China, which is its largest trading partner. This?is driving Vietnam’s?move?to strengthen ties with Russia and other countries.

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