Oil and gas in the capitals
In June 2022, World Oil reported that Beijing threatened Jakarta with maritime force over its E&P activity in the Tuna Block of the Natuna Sea. Beijing said Tuna, some 1,157 mi from the mainland, belonged to China. Because the Indonesian threat was new, and because it followed a series of identical E&P intimidation campaigns against Japan, Vietnam, and the Philippines, World Oil predicted that Malaysia would likely be next. That’s happening now.
Chinese maritime harassment of Malaysia is not new, however. In April 2020, the Chinese survey ship, Hai Yang Di Zhi 8, escorted by armed China Coast Guard (CCG) ships and China Maritime Militia (CMM) vessels, sailed into Malaysia’s EEZ, menacing the West Capella drillship, contracted by Petronas to develop Kasawari gas field in Luconia Shoals, offshore Sarawak. Kasawari is within Malaysia’s EEZ, but China claims it, along with 80% of the southern South China Sea via its “nine-dashed line” map.
The Royal Malaysian Navy (RMN) deployed warships against the intrusion. The U.S. Navy sent six ships to help, including littoral combat ships, an amphibious assault ship, a guided missile cruiser, and a guided-missile destroyer. The Australians sent a frigate.
Three months after the West Capella incident, the Malaysian government revealed that Chinese vessels had violated Malaysian South China Sea EEZ waters 89 times between 2016 and 2019. It also revealed the CCG had been haunting the West Capella since October 2019.
On May 31, 2021, the Royal Malaysian Air Force sent aircraft to intercept 16 Chinese military jets near Luconia Shoals. In June 2021, CCG ships sailed into Luconia Shoals to intimidate Malaysian E&P operations yet again.
Repeated targeting. Since then, there have been scores more Chinese maritime intimidation incidents against Malaysia. More recently, on Feb. 17, Beijing sent its massive CCG 5901 ship to again stalk Malaysia’s Kasawari project, coming to within 1.5 nautical miles of it, says the Asia Maritime Transparency Initiative.
As an aside, the current Malaysian EEZ intrusions are happening as Beijing is ramping up CCG and CMM deployments, seemingly in all disputed South China Sea areas. It looks like these deployments might be long-lasting as well, almost like an occupation.
Thus, after so much Chinese maritime intimidation of Malaysia, how is the latter “suddenly being targeted?” Because on March 29 through April 1 this year, during a state visit to China by Malaysian Prime Minister Datuk Seri Anwar Ibrahim (Fig. 1), Beijing essentially told him, “You’re next.”
PM Anwar told the press that Beijing, which had just invested $12.5 billion in Malaysia, was perturbed at Petronas carrying out “major [E&P] activity at an area that is also claimed by China” in offshore Sarawak. The specific project wasn’t named, but the direct inference was Kasawari.
Kasawari is a strategic symbol to Beijing. Kasawari’s E&P operations are some of the most strategically important in Malaysia’s recent history. Kasawari is estimated to contain 3.2 Tcf of natural gas and will likely produce 900 MMscfgd, plus additional volumes of condensate. JX Nippon Oil & Gas Exploration is a key partner. First production is scheduled for this year.
Kasawari’s production infrastructure is massive. It includes an 8,600-t KSDP-A drilling platform with nine slots; a 47,000-t, eight-legged, central processing platform (KSCPP); a Sarawak riser platform (SKR-D); and an 85-km export pipeline connecting to an E11R-A platform. The project uses cutting edge Honeywell UOP Separex technology to remove carbon dioxide and other contaminants from the natural gas. It is one of the largest offshore gas treatment systems in the world. Much of the gas from Kasawari will be exported to Thailand.
PM Anwar also announced he was willing to negotiate with Beijing over their E&P friction. He said, “That is the best that we can do now, so that it would prevent them (China) from continuing to provoke us.” His domestic political opponents balked. Indonesia, the Philippines, Vietnam and Japan all recently told Beijing to go pound sand regarding recent E&P threats. Anwar’s opponents feel the same.
The question now is, is Anwar stalling Beijing, or aiming for appeasement? A flurry of statements shed some light on the matter, but not quite enough.
After taking heat, Anwar said the week of April 12 that Petronas would continue its Sarawak operations. He says he told Beijing the same thing. Malaysia’s Foreign Ministry said its position would not be compromised, but friction with China should be solved peacefully. On April 11, Petronas CEO Muhammad Taufik said his firm had a right to carry out exploration activities in Malaysian territorial waters and that it had worked with Malaysia’s National Security Council on the matter.
Dr. Azmi Hassan of the Nusantara Academy for Strategic Research added context, saying Malaysia had to consider China as a “big brother” because of its economic and military might. Dr. Hassan also said, however, that Malaysia had another “big brother” in the U.S., based on its response to the April 2020 West Capella incident.
What happens next in Malaysian waters? Based on Beijing’s actions against Japan, Vietnam, the Philippines, and Indonesia, more CCG and CMM intimidation is likely. And there will be more decisive pushback from Malaysia’s ASEAN neighbors. And there will be more pushback from ASEAN’s U.S. and Australian allies. But what will Anwar do? Will he order Petronas to stop operating the colossal Kasawari project? Will he force Petronas to fork over some of its profits to Beijing? Or will he ignore Beijing and risk retribution? PM Anwar’s time and options are limited, to say the least. Stay tuned.
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- Oil and gas in the Capitals (February 2024)
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- First oil (February 2024)
- E&P outside the U.S. maintains a disciplined pace (February 2024)
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