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AMID
plans for a congressional inquiry into allegations of a
possible constitutional breach in a tripartite review of
resources in the South China Sea, former energy
secretary Vincent S. Perez and energy undersecretary
Eduardo V. Mañalac stressed the commercial nature of the
agreement covering that review—meaning, it is not a
treaty subject to Senate ratification.
The
agreement for a joint marine seismic undertaking (JMSU)
is a three-year commercial agreement between the oil
companies of three countries—the Philippine National Oil
Co. (PNOC), China National Offshore Oil Co. (CNOOC) and
PetroVietnam—to jointly gather seismic data in certain
areas of the South China Sea, Perez and Mañalac said in
a joint statement.
A
finding by Congress or by other inquiries that it is
indeed a commercial agreement which does not impair the
country’s territory nor its pending claims in the South
China Sea could be the only way out for the Arroyo
administration from this latest scandal hounding it,
with allegations that the agreement is a quid pro quo
between Manila and Beijing for the grant of at least $8
billion in loans for Arroyo’s embattled government.
On
Sunday the head of the Senate foreign relations
committee revealed plans to open hearings on the
controversial 2005 Spratly Islands agreement when
Congress resumes session after the Holy Week break.
In a
statement, Sen. Miriam Santiago noted that the 2005 JMSU
raises the issue of whether it violates the
constitutional provision on Philippine sovereignty or
jurisdiction over defined national territory.
She
expects the Spratly issue, following Senate practice, to
be assigned to two committees: the foreign relations
committee, which she chairs, to tackle the
constitutional and legal aspects, and the blue-ribbon
committee for the criminal aspect.
According to her, a mere scientific or technical
cooperation agreement, which does not diminish or
threaten Philippine sovereignty or jurisdiction, is
constitutional. She explained that the JMSU will collect
data and information on the potential oil and gas
reserves in the area, planned to last for three years,
at $15 million.
The
rationale for the tripartite agreement and its proper
context were explained by Perez and Mañalac’s joint
statement on Friday: “With our high dependence on
imported petroleum and with rising oil prices in 2004,
the government launched an ambitious five-point energy
independence agenda targeted to develop indigenous
petroleum resources, promote renewable power, increase
use of alternative fuels, form regional strategic
alliances, and strengthen energy conversation programs.”
Perez
said the PNOC then was extremely careful and consistent
in ensuring the constitutionality of the JMSU. The PNOC
closely coordinated with concerned agencies such as the
Departments of Energy (DOE), Foreign Affairs (DFA) and
Justice (DOJ) to ensure complete staffwork.
Mañalac
said the JMSU is a commercial agreement between three
national oil companies to jointly acquire seismic data.
“No exploration, drilling and production activities were
covered by the agreement. The JMSU is simply a
data-gathering effort among the three oil companies. The
JMSU is not a treaty. If at the end of the three-year
term of the JMSU, no new definitive agreements are
agreed on, then the JMSU expires by June 2008,”
explained Mañalac.
Both
former energy officials said neither the President nor
the Department of Energy sign the JMSU. However, the
approval of the respective governments of the three oil
companies was required to make the commercial agreement
binding.
The JMSU
explicitly stated that the signing of the commercial
agreement shall not undermine the position held by the
Philippine government over the South China Sea. The
agreement is designed to be scientific in nature and
does not affect any territorial claims of the Philippine
government.
Perez
said the Philippine government supported the JMSU to
promote regional energy security. It hoped to contribute
to the transformation of the South China Sea into an
area of peace, cooperation and development, which was
part of a strategic alliance to promote regional energy
security, to lessen the region’s dependence on Middle
East oil.
In
August last year, Forum Energy Philippines Corp.
president Jose Raymund Apostol warned that the
government could lose control over the proceeds and
development of the oil and gas prospects along the Reed
Bank, should it proceed to explore and develop the block
with its tripartite partners China and Vietnam instead
of allowing a British-based petroleum player to proceed
with its work in the area.
“The
government will be left with only a third of what it
could earn from the proceeds of developing and
extracting oil from the Reed Bank should our geophysical
survey and exploration contract [GSEC 101] not be
converted into a service contract,” Apostol said.
Earlier
reports noted a looming conflict in converting the GSEC
101 of the UK’s Forum Energy Plc. on the Sampaguita oil
and gas discovery in the Reed Bank basin, which is
within the “conflict area” of the South China Sea and
covered by the seismic review currently being undertaken
by the Philippine National Oil Corp., China National
Offshore Oil Corp. and PetroVietnam.
The
Forum Energy official said his company is financially
and technically capable of completing the work program
his company has envisioned for the Reed Bank, in view of
reports quoting Energy Undersecretary Guillermo Balce as
saying the company has yet to document its financial
capability.
He
hinted at the option of suing the Philippine government
if the contract is taken away from them: “We cannot do
anything, as we are just waiting for whatever the
government will say, but remember that Forum is a
UK-listed company, and we all know that legally, the
license is ours. And if it turns out unfavorable to
Forum, definitely, we will not take it sitting down and
will have to refer it to our legal counsel, as it cannot
be taken from us easily,” Apostol said.
He said
they had submitted as early as August last year the
documents showing not just their financial capability,
but technical capability as well.
The
issue of financial and technical capability is usually
raised against a company before it is awarded a contract
with the Philippine government. Once a company becomes a
registered contractor for the government—as Forum Energy
is—the next thing it is required to do is to perform and
deliver the commitments made in a contract, noted
Apostol.
Based on
Forum Energy’s study, according to Apostol, they would
have to spend $100 million to set up several drilling
wells, and around $15 million to $20 million to
commission drilling rigs.
Apostol
said that Forum Energy, with its parent company
publicly-listed at the London Stock Exchange, has
already raised $20 million from investors.
“While
the DOE [Department of Energy] could be saying all over
the press that we need to show our financial capability,
apart from the internally generated funds, we also plan
to tap financial institutions,” he said.
“When we
are ready to drill, money will pour in quickly as people
will find out about the feasibility of the project.
Usually, when you drill a well and prove to have
recoverable reserves, it is not difficult to raise
subsequent funds,” said the Forum Energy official.
Apostol
said they have already spent more than $5 million in
exploring 1.036 million hectares offshore of the Reed
Bank.
He hopes
the government would consider the length of the
company’s presence and investments in the Reed Bank.
Forum
Energy chief executive Russel Harvey earlier told
shareholders of the “political sensitivities” of the
Sampaguita gas discovery, and yet affirmed the company’s
target to secure approval on its application for a
service contract from the Philippine DOE.
The
three-dimensional seismic survey on the Sampaguita gas
prospect reveals the reserve could hit 3.4 trillion
cubic feet (TCF) gas-in-place with upside reaching 20
trillion cubic feet—an acreage that could be comparable
or even surpass Malampaya’s potential.
Meanwhile, even as she confirmed plans for her committee
to open hearings on the JMSU after Holy Week,
Santiago
recalled that former senator Franklin Drilon, while
serving as justice secretary, issued a 1990 opinion
stating it was “legally feasible” for the Philippines
and Australia to conduct a similar offshore seismic
project.
She
quoted Drilon as ruling that “the project proposal which
involves data-gathering, processing and interpretation
techniques envisioned preexploration activities which
are not covered by constitutional limitations.”
Santiago
chided Drilon’s turnabout. “Drilon in 1990 said that a
seismic project with Australia was legally feasible.
Now, Drilon in 2008 is saying that a similar seismic
project with China could be a legal basis for impeaching
President Arroyo. He will have to explain his mental
calisthenics before the committee,” she added.
Santiago
recalled that in the former justice secretary’s 1990
opinion, “Drilon stated that after completion of the
seismic project, the President may enter into a service
contract with a wholly-owned Australian corporation for
large-scale exploration, development, and utilization of
petroleum resources in accordance with Presidential
Decree 87, and other pertinent laws.”
She also
recalled that Drilon, in 1990, approved not only the
seismic project, but even a service contract with a
foreign country for the use of petroleum resources. “By
contrast, in 2008, Drilon implies that a similar seismic
project, without a service contract, is already illegal
and exposes the President to impeachment. This is a
flip-flop that shows intellectual inconsistency,” she
added.
Santiago
likewise cited the 1992 Asean Declaration on the South
China Sea issued in Manila, where Asean foreign
ministers resolved, without prejudicing the sovereignty
and jurisdiction of countries having direct interests in
the area, to explore the possibility of cooperation in
the South China Sea relating to the safety of maritime
navigation and communication, protection against
pollution in the marine environment.”
She
noted that the 1992 Declaration was followed by the 2002
Asean-China Declaration on the Conduct of Parties in the
South China Sea, which she said “is merely a political declaration,
without binding legal force, seeking to turn a sea of
disputes into a sea of cooperation, pursuant to the
policy of the late Chinese leader Deng Xiao Ping.”
Deng
advocated the principle of “putting aside the disputes
and jointly exploiting” the area of the
South China Sea.
“There
is a curious question of timing. Since the pact was
signed three years ago, why is it only now that it is
being assailed as alleged presidential misconduct? What
is the basis for the charge by a foreign writer that it
is an alleged sellout?” she said.
Santiago
warned that RP-China relations should not be dragged
into the political fray, noting that China has extended
preferential loans to the Philippines for various
development programs, and is now the main financial
provider for Southeast Asia, ahead of the World Bank,
the Asian Development Bank and aid programs from the US
and Japan.
“The
anti-Arroyo campaign should not be turned into an
anti-China campaign. We should consign power plays to
the domestic arena. International relations and
diplomacy are too important to our national interest to
be used as partisan political ploys. It takes decades
to build up good interstate relations,” she said. |
