Vietnam has agreed to pay compensation to foreign operators after cancelling their planned drilling campaigns, a decision taken after pressure from Beijing over upstream operations in disputed waters of the South China Sea.

State-owned oil and gas company PetroVietnam is to pay $800 million to Spanish operator Repsol and a further $200 million to Mubadala Petroleum of the United Arab Emirates, according to a report in The Diplomat.

"With minimal interests in China, Repsol appeared ready to withstand political pressure from Beijing.