South China Sea ventures: Manila will consult Asean

Philippines may explore for oil and gas in area with China

Chinese dredging vessels are purportedly seen in the waters around Mischief Reef.

The Philippines has promised it will consult its neighbours on any joint oil and gas exploration with China in the disputed South China Sea and that such a venture in its waters will have to adhere to its laws.

"It will not be a unilateral action from the Philippines because the premise of the President is peace and stability, and unilateral action by anybody leads to destabilisation," said Foreign Secretary Alan Cayetano yesterday.

"There will also have to be consultations with the whole Asean because we want to keep the stability there," he added.

He told reporters yesterday that Manila and Beijing "are still talking about principles", or a framework of a possible agreement. "We're exploring if we can explore," he said.

He added:"The parameters are simple. Any agreement has to be in conformity with the Constitution and local laws. Any agreement will not give up a single inch of our territorial integrity."

On Monday, President Rodrigo Duterte had said a partner had been found to develop oil and gas fields inside the Philippines' exclusive economic zone. The Philippines had previously been in talks with China oil giant CNOOC over the possibility of joint exploration.

A day later, visiting Chinese Foreign Minister Wang Yi said China is open to exploring jointly with the Philippines for oil and gas in the disputed waters.

The Constitution grants the Philippines sovereign rights to access offshore oil and gas fields, including Reed Bank, which is some 140km off Palawan province and also claimed by China.

Surveying in Reed Bank began in 2003 under a Joint Marine Seismic Undertaking among the Philippines' PNOC Exploration, China's CNOOC and state-owned PetroVietnam. Manila did not extend the agreement when it lapsed in 2008 after criticism from within the Philippines that the deal compromised its sovereignty.

China insisted that it should take the lead, citing its historic rights over Reed Bank and the rest of the South China Sea. China had since then been blocking efforts by the Philippines to explore for resources in Reed Bank as the Philippines wanted it done on its own terms.

In 2011, Chinese patrol vessels almost rammed a Philippine-contracted, Singapore-flagged survey ship in Reed Bank.

The Philippines suspended all drilling and exploration works in Reed Bank in 2014 because of escalating territorial disputes following a case Manila filed with an international tribunal challenging Beijing's claims to the South China Sea. But since President Rodrigo Duterte took office, ties between Manila and Beijing have become warmer.

Some Filipino oil executives think teaming up again with CNOOC could solve problems on both the diplomatic and logistical fronts.

Philippine state-run Philex Petroleum approached CNOOC in 2012 about a possible joint development, but the latter declined due to rising Manila and Beijing tensions.

On joint exploration, Mr Rufino Bomasang, a former Philippines energy undersecretary, said: "It is something worthwhile resuming. If there's good faith on both sides, why not? And I hope so."

The Philippines seeks to develop Reed Bank before its main source of domestic natural gas runs out.

According to US oilfield services company Weatherford, one concession alone contains 8.8 trillion cu ft of natural gas - which is up to triple that discovered at the Malampaya offshore field, which powers 40 per cent of the main island of Luzon, home to the capital Manila.

Malampaya is approaching the end of its productive life, with its only viable replacements in waters that China insists it will not cede.

Philex has the controlling stakes in two stalled concessions, the 880,000ha SC-72 in Reed Bank and the 616,000ha SC-75 off Palawan.

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A version of this article appeared in the print edition of The Straits Times on July 27, 2017, with the headline South China Sea ventures: Manila will consult Asean. Subscribe