Philippines’ Marcos says Mid-East war may spur energy talks with China in disputed sea

MANILA – Philippine President Ferdinand Marcos Jr is open to restarting talks with Beijing on a joint oil and gas project in a disputed area of the South China Sea, saying the war in Iran may provide the impetus for a breakthrough.

Mr Marcos and Chinese President Xi Jinping in 2023 agreed to resume discussions on a joint oil and gas development in the waterway, which has been stalled for years.

“That’s something we’ve been talking about for a great deal, but territorial disputes are getting in the way of that,” Mr Marcos said on March 24.

“Maybe this provides impetus for both sides to come to an agreement,” he said, referring to the conflict in the Middle East. “That’s something we are exploring. Everything that might be of help, we are certainly pursuing.”

The remarks signal a possible further easing of tensions between the Philippines and China, which have ramped up since Mr Marcos took office in 2022.

Mr Marcos has bolstered military ties with the United States to help safeguard the Philippines’ claims in the South China Sea, leading to repeated clashes with Chinese ships deploying water cannon against Philippine ships and crew.

The past few months have seen fewer such incidents in the resource-rich waterway as economic relations improve between the countries.

The current energy crisis is also putting Mr Marcos in a tough spot as the Philippines looks to secure supplies, potentially making joint development more attractive.

In 2023, the Philippines began importing liquefied natural gas for the first time as production at its main Malampaya gas field dwindled.

Philippine-listed PXP Energy, which holds a service contract in the South China Sea’s Reed Bank, has previously held talks with China National Offshore Oil for possible joint development. But talks have not gone anywhere for more than a decade, with China previously blocking attempts to explore in the area.

The Philippines is also in talks with China on fuel and fertiliser, according to Mr Marcos.

“They’ve been very helpful with fertilisers,” he said. “We’ve always tried to differentiate territorial disputes from our trade arrangements,” he added.

The Philippines is exploring the possibility of sourcing crude oil from Russia too, Mr Marcos added.

Asked whether he supported the US-Israel war in Iran, Mr Marcos said “we never want war”.

“Our foreign policy is very simple: it’s peace and national interest,” he said.

The military alliance between the Philippines and US has strengthened under Mr Marcos, who allowed US troops to access more Philippine bases and deploy missile systems.

Despite the Iran war, the Philippines has not seen “a significant drawdown in terms of the activities of American forces here”, Mr Marcos said. “Again, the critical element is how long this war is going to last.”

“We’re watching, waiting, hoping and praying that this ends soon, and that we go back to some kind of normal, whatever that normal will be,” he said. BLOOMBERG