Just how much is the oil and gas in the disputed waters in the South China Sea/West Philippine Sea?
Nobody really knows, as there are in fact only rough estimates. The Chinese are saying there could be over 100 billion barrels of oil. A more conservative estimate puts it at seven billion barrels of oil and about 900 trillion cubic feet of natural gas. A 1993 US Geological Survey (USGS) estimate placed the discovered and undiscovered oil reserves in the offshore basins of the South China Sea at 28 billion barrels. In 2010, the USGS updated this and said there could even be as much as 750 million barrels of oil in the area.
Given this, it makes eminent sense for the Duterte administration to pursue possible joint exploration of these natural resources by the Philippines and China.
Malacañang has already said it expects to come up with a joint exploration deal with China before the visit of Chinese President Xi Jinping later this year. This is a positive development.
If the joint exploration agreement involving Philippine and Chinese firms pushes through and leads to the development of an oil or natural gas field like what happened in Malampaya, then the Philippines stands to benefit by way of ample energy resources to power our industries and successfully implement the Duterte administration’s “Build, Build, Build” infrastructure program.
Malacañang’s plan is likely to muster support from the legislature, particularly the House of Representatives, where Speaker Gloria Macapagal-Arroyo, who as the President then, signed 14 years ago a Joint Marine Seismic Undertaking with China.
In the Senate, several lawmakers are said to be open to the idea of a joint exploration arrangement as long as it is confined to a commercial venture, complies with constitutional guidelines and is mutually beneficial.
Even Senior Associate Justice Antonio Carpio, who has been staunchly defending the country’s sovereign claims to the West Philippine Sea (WPS), has indicated support for a commercial agreement to explore and develop the area. He said that while the use and enjoyment of our exclusive economic zone (EEZ) is reserved exclusively to Filipino citizens, Chinese companies can participate in the exploitation of oil and gas in our EEZ as technical and financial contractors of the Philippine Government or Filipino companies under Philippine law.
Current global and regional realities and moves toward economic integration in Southeast Asia now exert additional burdens on our economy, which is among the fastest-growing in the Asia-Pacific region.
Our economy needs to further enhance its competitiveness and attract more foreign investments to sustain its growth momentum.
The WPS, with its rich oil and gas deposits, is an opportunity waiting to be tapped and developed. But we can only go as far as sending scientists to the area to conduct research because neither the government nor our private sector has the financial capability to shoulder the huge costs needed for its exploration and development.
President Duterte’s pragmatic approach to this territorial dispute, which is actually constitutionally and legally sound, will immensely benefit the Filipino people.
A joint exploration arrangement between Manila and Beijing, so long as these are covered by commercial agreements, is legally acceptable.
A joint exploration deal promises to deliver salutary economic results without compromising our sovereign claims or any of our constitutional provisions. It does not in any way diminish the Philippines’ triumph in the United Nations Arbitral Tribunal which invalidated China’s nine-dash claim and upheld instead our exclusive rights over the WPS.
The Constitution allows the government to jointly explore and develop our natural wealth with foreign-owned corporations provided that it retains full control and supervision of these resources. Section 2, paragraph 4 of Article XII of the Constitution provides: “The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development and utilization of minerals, petroleum and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local scientific and technical resources.”
The Duterte administration’s idea of a joint exploration arrangement with Beijing through a commercial agreement already has a precedent. The Department of Energy did this when it entered into a contract with a consortium led by Shell Philippines Exploration B.V. to operate the Malampaya natural gas facility. This arrangement has proven advantageous to the country as the Malampaya consortium has remitted a total of P173.28 billion to the government as its share from the net proceeds of petroleum operations for the 2002-2013 period alone. The Malampaya Gas Project has also significantly helped in meeting the country’s energy requirements, as it supplies gas to three power plants, providing roughly 50 percent of Luzon’s power needs.