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Removing Chinese Oil Rig Won’t Cool China-Vietnam Hostilities

TAIPEI (TheStreet) -- China's removal of a giant oil rig from waters disputed by Vietnam gives Hanoi everything it wanted -- but it will not resolve the bigger problem of bad blood between the two countries or calm tensions in an internationally prized ocean.

Beijing said July 15 it had removed a $1 billion rig that was placed in the South China Sea on May 2. The rig was operated by China's state-owned CNOOC (traded in Hong Kong), and was positioned in water that Vietnam -- long trustful of its Communist neighbor -- had sighted for its own exploration.

The rig's removal ahead of its expected end-of-mission in August answered loud demands from Hanoi. But it will solve few problems in the long term. Vietnamese officials chided China even after the rig's removal, and their state media say more rigs are coming.

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Withdrawal of the rig from the Gulf of Tonkin site also doesn't address the core of Sino-Vietnamese disputes, which is that Vietnam just can't stand China right now.

Lack of resolution on the bigger issue sustains the risk of more upsets and keeps at least an orange flag raised over the 3.5 million-square-kilometer sea where commercial drillers, marine shippers and six governments are testing the waters that boast strategic ocean lanes and undersea fossil fuel reserves.

"In my opinion, new rigs continue to prove China's big ambition to control the whole Sea, despite of other countries' legal rights and benefits," says Hoang Thu Huyen, Vietnam country manager with investment consultancy Dezan Shira & Associates.

Her opinion is typical of views in Vietnam. Boat-ramming incidents near the oil rig in May led Vietnam to become the scene of violent anti-China protests that rippled into a wave of protest against other foreign investors too.

Vietnam said last month at least one more Chinese rig was on the way. Whether or not it reaches Vietnamese-claimed waters, Beijing has not renounced plans to keep exploring for oil in the South China Sea.

Its maritime ambitions have upset the Philippines since a stand-off in 2012, and tiffs with Vietnam go back to the 1970s when the South China Sea dispute appeared big on the horizon. Scholars expect China to extend its claims, which are a boon to CNOOC and the nation's fast-growing economy.

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