Philippines might look for oil outside China deal

By Kyle Aristophere T. Atienza, Reporter

PRESIDENT Ferdinand R. Marcos, Jr. on Thursday said the Philippines might explore for oil and gas in areas it claims in the South China Sea outside a government-to-government arrangement.

The Philippines has major differences with China on joint exploration talks, he told reporters.

“There might be other ways so it does not have to be (government to government,” he said. “We’ll have to find a way… because we need it already.”

Oil exploration talks between China and the Philippines under ex-President Rodrigo R. Duterte got canceled in June after the parties failed to reach a compromise.

Policy and investment analysts said exploration activities in the disputed waterway should be led by the government because it involves sovereignty issues.

“Exploration activities in disputed waters should always be led by the Philippine government because these activities involve issues relating to sovereign rights and international law,” Terry L. Ridon, an investment analyst, said in a Facebook Messenger chat.

“The private sector cannot afford to take financial and political risks over areas that remain in dispute to this day, despite the Hague arbitral ruling in 2016,” he said, adding that oil exploration is a sovereign act and private companies merely act as state agents.

A United Nations-backed tribunal voided China’s claim to more than 80% of the South China based on a 1940s map.

Enrique D. Manalo, Mr. Marcos’ Foreign Affairs secretary, in August said the Philippines was open to new oil and gas exploration talks with China. Any deals must comply with Philippine laws, he said.

“China is claiming that the area belongs to them,” Mr. Marcos said in Filipino. “The Philippines is saying that the law must be followed. But the Chinese [government] is saying that that is ours so you should follow us.”

“That is the major roadblock,” Mr. Marcos said, adding that it is hard to find ways to resolve the issue. 

Michael Henry Ll. Yusingco, a policy analyst, said Mr. Marcos was right to view the joint exploration plan as “very complex and riddled with issues” that can’t be resolved by the personal relations of government leaders.

But exploration activities in the South China Sea should always involve the Philippine government, he said.

“Our Constitution does not allow our government to simply surrender to private entities the authority to conduct exploration activities in the West Philippine Sea,” he said in a Messenger chat, referring to areas of the sea within the Philippines’ exclusive economic zone.

“Our government can negotiate with nongovernment entities if it chooses to do so. But only our government can negotiate on behalf of the Philippines about any joint exploration for oil.”

The Philippines’ energy needs heavily depend on imported fuel. Inflation has reached record highs due in large part to oil price increases triggered by global supply shocks.

“Oil extraction will continue to be contentious if the framing of the government is ‘We should use it to prioritize our energy needs,’” Hansley A. Juliano, a political economy researcher, said in a Messenger chat.

“For the past decade, our energy and environmental advocates have been pointing out that we should instead be pursuing a genuine mixed energy matrix, If not flat out turn to renewables,” he said. “Granting the remaining impracticality of renewables to service our industries, we should nonetheless consider it to meet our international commitments.”

Mr. Juliano said the Philippine push to hold the world’s biggest climate polluters into account would be undermined once it allows China and other countries to continue drilling for oil. “It will not only ruin those areas where we will extract them from, they will lead further to global environmental damage.”

Mr. Yusingco urged the Marcos government to craft an exploration blueprint for Philippine areas in the South China Sea.

“He simply cannot do this alone, and he should not even think that he can do this alone,” he said. “This is really an ‘all hands on deck’ situation for the administration. This is what we need to keep an eye on.”