Malampaya offshore site northwest of Palawan (INQUIRER FILE PHOTO)
MANILA, Philippines — The government should lift the suspension of oil and gas exploration projects in the West Philippine Sea, particularly in Service Contracts (SC) 72 and 75 which are both located within the Philippines’ exclusive economic zone (EEZ) being claimed by China.
Philippine-based PXP Energy Corp. and its subsidiary Forum Energy Ltd. reiterated their call for the lifting of the suspension, while Washington-based think tank Asia Maritime Transparency Initiative (Amti) of the Center for Strategic and International Studies noted that the Philippines is the only claimant in the South China Sea that is not developing hydrocarbon resources on the portions of its continental shelf covered by China’s massive claims.
“By contrast, 2022 was comparatively quiet when it came to tensions over hydrocarbons, aside from one encounter involving the Philippines. But as several claimants forge ahead with new offshore projects in 2023, oil and gas development could reemerge as a primary flashpoint in the disputes,” Amti said in a report released last week.
It noted further that the prospect of a confrontation between Chinese law enforcement and oil and gas operators is high, as the China Coast Guard (CCG) has increased the frequency of its patrols in the South China Sea.
Agreement with China
But for Gregory Poling of Amti, this is not an excuse to not do surveying activities in search of oil and gas deposits within the country’s EEZ.
“The Philippines should be asking itself if all the neighbors stood up to CCG harassment in recent years and successfully developed new fields, why can’t it do the same at Reed Bank?” he said.
China has been known to intimidate energy exploration activities of South China Sea claimants, and analysts said this was to pressure them into accepting joint development deals with Beijing.
China claims the entire South China Sea, but an international arbitral tribunal in 2016 invalidated its historical claims through its so-called nine-dash line. Beijing rejects the ruling.
In 2018, the Philippines and China signed a memorandum of understanding (MOU) for joint oil and gas development in the West Philippine Sea.
President Benigno Aquino III imposed a ban in 2014 on that activity, due to maritime tensions with China. But his successor, Rodrigo Duterte, lifted it six years later.
Duterte, however, said the Philippines must continue to honor its agreement with China on joint exploration. Thus the Department of Energy ordered anew a suspension in 2022 on oil exploration activities in SCs 72 and 75, pending a go-ahead from the Security, Justice, and Peace Coordinating Cluster which also cited “the political, diplomatic and national security implications of any activity in the West Philippine Sea.”
Interest
PXP, controlled by businessman Manuel V. Pangilinan, holds a 50-percent interest in SC 75, while its London-listed unit Forum Energy has a 70 percent participating interest in SC 72, two permits covering exploration in offshore northwest Palawan.
During President Ferdinand Marcos Jr.’s state visit to China last January, the Department of Foreign Affairs released a statement saying that the Philippines and China had agreed to resume exploration discussions in the West Philippine Sea.