Businessman Manuel V. Pangilinan is not worried about proceeding with his gas-exploration project in the Recto Bank of the West Philippine Sea. Relations between China and the Philippines have improved under the Duterte administration, he observes. He thinks it’s time the government allows the resumption of drilling and exploration activities suspended in 2015 in areas subject to territorial disputes between the two countries.
Recto Bank, also called Reed Bank in international maps, is covered by Service Contract (SC) 72, an exploration permit the government had awarded to Philex Petroleum Corp., Pangilinan’s group. But granting the government does lift its exploration ban in the area, can Pangilinan and company proceed without any fear of possible harassment by China, which is also claiming Recto Bank by virtue of its “nine-dash line” theory?
Previous administrations have said there should be no problem since the area is clearly within Philippine territory, but drilling for oil and gas in these waters will always be easier said than done. Even if the Permanent Court of Arbitration in The Hague invalidated China’s claim over most of the South China Sea last year, that ruling means nothing to the Chinese government. Where there is an abundance of energy sources there will always be disputes.
The Recto Bank gas deposits are believed to be thrice the size of the Malampaya natural-gas reserves off Palawan province. The Philippines has an estimated 98.54 billion cubic meters of proven natural-gas reserves, according to the CIA World Factbook cited by an Oxford Business Group article in 2011. Our country may also be sitting on huge reserves of oil. A US Energy Information Administration report estimated proven and undiscovered oil reserves in the South China Sea could range from 28 billion barrels to as much as 213 billion barrels of oil. The number could exceed every other country’s proven oil reserves—except those of Venezuela and Saudi Arabia, according to the BP Statistical Review.
Again, can the Philippines tap these energy resources without reigniting political tensions with China? That is the main problem.
These offshore energy blocks are sitting on a powder keg. For instance, the 15 offshore territories that the Philippines had offered for exploration include two areas—areas 3 and 4, about 80 kilometer northwest of Palawan province—that China claims as part of its sovereign territory, even though they are well within our country’s 200-mile continental shelf, which under the United Nations Convention of The Law of the Sea (Unclos) is Philippine territory.
Vietnam, Brunei Darussalam, Malaysia, Indonesia and Taiwan have also long claimed sovereignty over partly overlapping areas of the South China Sea.
We can always say this or that area is without a doubt Philippine territory, but will China agree? Will other countries?
China has been asserting its territorial claims more aggressively because it is in dire need of resources, like oil, minerals and metals, to continuously supply its economic growth, not to mention fish, lots of fish, to feed its people.
The Spratly Islands are believed to hold vast energy reserves and bounteous fishing grounds that would be strategically vital to China’s economic interest. China had previously protested the Philippine government’s plans to explore oil and gas in the Spratlys at every turn. It protested Malacañang’s bidding out rights to explore oil and gas in the 15 offshore territories. It frequently shoos away our fishermen, civilian and even military vessels while they are plying our own territorial waters.
Xinhua News Agency in a story in 2012 said China National Offshore Oil Corp. (CNOOC), China’s state-owned oil and gas firm, had already started drilling near the disputed shoal even amid an ongoing standoff with the Philippines.
Indeed, if relations between the Philippines and China are moving in positive directions then perhaps a joint venture with CNOOC is possible, just to ease political tensions or bypass cloudy sovereignty issues.
The energy department said about 50 foreign investors, including some of the world’s largest oil companies, have expressed interest in exploring for oil and gas in the Philippines, half of them in the new areas also being claimed by China.
We do agree with Pangilinan. We must find a way to settle geopolitical issues and determine, once and for all, if there is really gas or oil or both in these waters.
3 comments
If there is such thing as bilateral accommodation then this must be the way out for a joint exploration between China and the Philippines. Invoking the need for energy security both countries would craft an agreement that permits this joint exploration without invoking sovereignty. It would be strikingly awkward for both governments to be giving its each other their imprimatur over Reed Bank but this would be in the interest of both countries in terms of benefits diplomatic, financial, economic, and energy-wise.
Both nations need each other, with both experiencing a crunch in energy sources. Philex Petroleum has a unique historical opportunity not only to address that need, but to call China out on its willingness to cooperate, and possibly be the benchmarck of that Asian superpower being an partner rather than an adversary.