The Philippine government’s move to lift the ban on oil exploration in the South China Sea is a unilateral decision that China is expected to respect, the Philippines’ energy secretary said Friday (Oct. 16).
Energy Secretary Alfonso Cusi also said in a virtual media briefing that he does not expect the move to affect the memorandum of understanding (MOU) between the Philippines and China on possible joint development in the disputed waters, as well as joint venture negotiations between exploration companies.
A day earlier, Cusi said Philippine President Rodrigo Duterte had approved the lifting of a ban on oil and gas exploration in or near disputed areas in the South China Sea that was imposed six years ago amid escalating territorial tensions with China.
The ban was imposed around 2014 by the administration of former Philippine President Benigno Aquino III. Prior to that, on January 22, 2013, the Aquino administration took China to the International Court of Arbitration in The Hague, Netherlands, for violating the United Nations Convention on the Law of the Sea (UNCLOS).
However, China refused to recognize the jurisdiction of the arbitral tribunal and refused to appear before the tribunal. In China’s absence, the arbitral tribunal declared in 2016 that China’s “nine-dash line” sovereignty claim had “no legal basis” and that China did not have “historic rights” in the South China Sea. “It is not the case that the Chinese government is not willing to accept or acknowledge this. China says “no acceptance, no recognition”.
China claims sovereignty over most of the waters of the South China Sea. China’s sovereignty claims overlap with those of neighboring countries and regions in the South China Sea, including the Philippines.
In response to the Philippines’ lifting of its ban on oil exploration in the South China Sea, Chinese Foreign Ministry spokesman Zhao Lijian said Friday that China and the Philippines have reached a consensus on the joint development of oil and gas resources in the South China Sea and have established a relevant consultation mechanism. Zhao Lijian hoped that both sides would “push for continuous positive progress in joint development”.
Analysts believe the lifting of the ban on oil exploration in the South China Sea region will pave the way for the resumption of three projects, including a possible joint project with China. Philippine Energy Secretary Jose Cusi said Thursday that project contractors have been notified of the resumption of energy-related activities in the South China Sea region.
The three areas for resumed oil exploration are in the western Philippines, including the hydrocarbon-rich waters of the Reed Bank.
The Reed Bank is an important oil and gas distribution area. According to a report by the U.S. Energy Information Administration (EIA), the total oil and gas reserves of the Reed Bank are 810 million tons, including 770 million tons (5.4 billion barrels) of oil and 0.4 billion tons (55.6 billion cubic meters) of natural gas. Playa del Sol is known as the second Persian Gulf because of its vast oil and gas reserves.
The Philippines’ current oil and gas reserves in the Malampaya region of the South China Sea will be depleted in less than 10 years. The oil and gas field, which supplies about 40 percent of the country’s electricity needs in the northern Luzon region, could be depleted in the near future, which has Philippine officials worried.
It is imperative to resume exploration, development and production activities in our exclusive economic zone to ensure the continuity of supply of the country’s indigenous resources,” Cusi said.
Cusi said the Philippines’ decision to lift the ban “places a legal obligation on the exploration company to commit capital to the contract area and to hire Filipino engineers and skilled workers to resume exploration.
He said the resumption of exploration will also help boost the economy, which has been hit by the coronavirus pandemic.
In recent years, the Duterte administration has been negotiating with China on possible joint exploration involving the Philippines and Chinese energy companies, including cooperation on oil and gas development in the Lira Beach waters.
The lifting of the ban is part of Duterte’s efforts to move forward with a potential joint oil exploration agreement with China, the broad lines of which were reached in 2018, according to Zvytana Paraskeva, an analyst at energy website Oilprice. in late 2019, the foreign ministers of China and the Philippines signed an agreement for joint oil and gas exploration between the two countries in the South China Sea.
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