Spratlys seas up for auction

The Philippine government plans to auction off areas of the South China Sea for oil exploration, despite worsening territorial disputes with China over the area, an official said on Tuesday.

Energy Undersecretary Jose Layug said several foreign firms, including China’s state-owned CNOOC Ltd., had already expressed interest in drilling for oil in waters off Palawan.

The areas set for exploration are far from the disputed Spratly islands and well within the Philippines’ 200-nautical-mile exclusive economic zone, Layug said on the sidelines of an energy conference in Manila.

“These are not disputed areas. The area we are offering for bidding is definitely within the territory of the Republic of the Philippines.”

However, China is known to claim most of the South China Sea, including areas the Philippines says are clearly Filipino territory.

Rising tension

Tensions have risen in recent months, with countries in the region claiming China has been more aggressive in enforcing its claims on parts of the South China Sea.

China, the Philippines, Vietnam, Malaysia, Brunei and Taiwan have overlapping claims to all or parts of the sea, which is believed to be rich in oil and gas deposits.

Aside from CNOOC, two other Chinese firms are among those interested in contracts to drill in the area, Layug said without naming the other two.

The Philippines is to name the winning bidders next year, Layug said.

He expressed confidence the Chinese would not try to harass Philippine-sanctioned oil exploration vessels there.

“These areas are near Palawan which means they (winning bidders) will have to come to the Philippines to do it,” he said.

Layug also said that the government would not suspend planned tenders of 15 oil and gas exploration contracts estimated to be worth at least $7.5 billion, including those in areas Muslim rebels are claiming to be part of their ancestral domain.

The separatist Moro Islamic Liberation Front (MILF) has asked the government to stop exploration activities, particularly by foreign firms, and the sale of power facilities in Mindanao.

Exploration continues

“We will continue our oil and gas exploration in that area … subject to the requirements of the Philippine law,” Layug told reporters. “What is clear is that the DOE has a mandate to develop oil resources. Pursuant to that mandate, we are pursuing PECR 4 (4th Philippine Energy Contracting Round),” Layug said.

Last week, President Aquino said 140 companies were interested in the government’s latest energy contracting round, in which 15 oil and gas exploration contracts are to be offered to local and foreign investors.

Energy Secretary Jose Rene Almendras has said the 15 projects, mostly located around Palawan and Sulu, were believed to have oil and gas deposits.

All in Philippine territory

He said the areas were all within Philippine territory, although two of the projects are in areas very near the South China Sea, which Manila now calls West Philippine Sea following competing claims with China.

There are about 30 active service contracts for hydrocarbon exploration in the country, including those held by foreign firms.

Exxon Mobil has completed the drilling of four wells in the Sandakan Basin in the Sulu Sea, and the firm was studying whether the area could be developed for commercial oil production, Layug said.

As this developed, an official Chinese newspaper accused the Philippines yesterday of lacking a sincere desire to resolve territorial disputes in the South China Sea and warned of unspecified consequences if China’s concerns are ignored.

Recent construction work by Philippine troops on an island claimed by Manila violates the spirit of a preliminary agreement reached last month to resolve disputes in the South China Sea, the ruling Communist Party’s flagship People’s Daily said.

‘A little show’

That shows Manila had merely been putting on “a little show,” the paper said in a signed editorial. China won’t sit idly by while its territory is swallowed up by others, it said.

“Were there to be a serious strategic miscalculation on this matter, the due consequences would have to be paid,” the newspaper said.

China has unveiled rules aimed at easing territorial disputes with the 10-member Association of Southeast Asian Nations.

China’s foreign ministry issued the guidelines agreed at a regional meeting in July, when Beijing, Asean and Washington sought to cool friction over rival claims in the South China Sea.

The guidelines were issued on the Chinese foreign ministry’s website (www.mfa.gov.cn) late on Monday. AFP, Reuters, AP