Vietnam’s state oil firm PetroVietnam has ordered Spanish energy firm Repsol to suspend its “Red Emperor” project off the country’s southeastern coast following pressure from China, the BBC reports.

It would be the second time in less than a year that Vietnam has had to cancel a major oil development in the South China Sea under pressure from China.

The move comes as Repsol was making final preparations for commercial drilling.

A rig, the Ensco 8504, was scheduled to depart from Singapore for the drill site on Thursday, the report said, citing an unnamed energy industry source.

The cancellation could cost Repsol and its partners $US200 million in sunk investment, according to the BBC.

Repsol and PetroVietnam executives could not immediately be reached for comment. The Vietnamese foreign ministry did not immediately respond to an emailed request for comment.

Red Emperor, known in Vietnamese as the Ca Rong Do field, is part of Block 07/03 in the Nam Con Son basin, 440 km off the coast of Vietnam’s southern city of Vung Tau.

The block lies near the U-shaped “nine-dash line” that marks the vast area that China claims in the sea and overlaps what it says are its own oil concessions.

The field can produce 25,000-30,000 barrels of oil and 60 million cubic meters of gas a day, Vietnamese news provider Cafef.vn reported last month.

Repsol spent around 33 million euros ($A53 million) on exploration in Vietnam last year, according to the company’s 2017 profit and loss statement.

The Red Emperor site is considered by Repsol’s top management as one of the company’s future growth projects.

Repsol, which has a 51.75 percent stake in the project signed a 384 million euro rental contract for a rig to start work on a Vietnamese site in 2019, according to the statement.

Reuters