TWO Cabinet secretaries and the Senate Energy committee head are confident that the lifting of the five-year-old moratorium on oil exploration in the West Philippine Sea will boost efforts to secure new sources of oil and gas, amid critics’ fears it would give China the upper hand in negotiations.
Foreign Affairs Secretary Teodoro Locsin Jr., sought for reaction to President Duterte’s late Thursday order lifting the suspension of petroleum activities in the WPS, quelled fears of Chinese control over any activities, noting two things: one, the lifting allows for participation by any country and company in joint activities with the Philippines; two, the existence of a Joint Memorandum of Understanding (MOU) with Beijing is crafted in such a way that it “protects Philippine interest” at every turn.
“That has been my insistence. The lifting of the moratorium is a welcome development because it is the last obstacle to actual development under the MOU on Oil and Gas,” Locsin tweeted in reply to a query from the BusinessMirror.
He said he had previously opposed a suggestion that would lift the moratorium only for projects with Chinese companies. “I shot that down as an acknowledgment that China decides what projects are acceptable in disputed waters, thereby conceding that China has the last word.”
But with the order issued last week, “he [Duterte] has quite rightly come up with a universal lifting,” Locsin said.
He revealed he had earlier offered the same MOU to the US, “but a US undersecretary of energy in a face-to-face meeting with me, said that the estimated reserves are too small to merit serious offers from big US oil companies and that we should try the small ones in Texas. But she stressed that the MOU was brilliantly crafted and fully protected Philippine sovereign rights.”
Duterte signed the MOU on joint exploration with China during Chinese President Xi Jinping’s 2018 visit to the Philippines, considered a high point in the country’s relationship with Beijing.
Former President Benigno Aquino III initiated the ban after his government took China to arbitral court for encroachments in the West Philippine Sea, which is said to be rich in oil and gas but is part of the Philippines’s Exclusive Economic Zone. The policy meant that the service contracts for oil resource development in the West Philippine Sea could not be pursued by the corporations that won them.
Gatchalian, Cusi upbeat
Duterte critics, including detained Sen. Leila de Lima and Sen. Risa Hontiveros, warned at the weekend that the order lifting the moratorium on oil exploration in the WPS strengthens China’s hand given the existing MOU between Manila and Beijing.
But Senator Sherwin Gatchalian, the Senate Energy Committee chairman, thinks good bilateral relations with Beijing preclude the possibility of the latter’s undue interference in oil and gas drillings in the area.
Guesting at DWIZ on Saturday, Senator Gatchalian reiterated his initial reaction when Energy Secretary Alfonso Cusi announced late Thursday the President’s order lifting the moratorium.
Given the dwindling supply from the Malampaya gas field, which accounts for 20 percent of power supply of the country and almost 30 percent in Luzon, Gatchalian sees reopening the gateway to oil and gas exploration in the West Philippine Sea is “most timely.”
“It will augur well in ensuring the country to be energy-sufficient if there are potential sources within the exclusive economic zones [EEZ] which could secure our energy supply in the coming years,” the senator had said after Cusi made the announcement.
With the lifting of the moratorium, Gatchalian expects “the stalled exploration and appraisal activities in Service Contracts 59, 72 and 75 can now resume and these could be new sources of oil and gas which can secure, if not contribute to stabilizing, the country’s energy supply.” This, he added, “could also open up the area to prospective investors under the Philippine Conventional Energy Contracting Program which is designed primarily to attract investors to explore indigenous energy resources.”
Before the moratorium was imposed, the Pangilinan-led PXP Energy was in negotiations with state-owned China National Offshore Oil Corp. (CNOOC), but several other players have expressed interest in the area as well.
Critics insisted, however, that the lifting of the moratorium was only meant to favor China, noting Duterte’s soft stance toward the Asian giant.
In his DWIZ radio interview, Gatchalian noted that, as 99 percent of oil supply in the Philippines is imported, there is urgency in developing local sources.
The DOE has flagged the dwindling of the Malampaya gas field in Palawan, with supply seen to run out in a few years.
‘Resume-to-work’
In announcing the lifting of the moratorium on Thursday, Cusi said a “Resume-to-Work” notice was issued by the DOE to the Service Contractors doing petroleum-related activities in the areas of SC 59, 72, and 75 in the West Philippine Sea. The activities there were suspended on the ground “Force Majeure” due to the WPS dispute. SCs 59 and 72 are operated by the Philippine National Oil Co.-Exploration Corp. (PNOC-EC) and Forum Ltd., respectively. Meanwhile, PXP Energy Corp. operates SC 75.
The lifting of the suspension will infuse the economy with fresh foreign direct investments and generates high-skills jobs, both of which are needed in order to boost economic recovery amid the Covid-19 pandemic, Cusi pointed out..
“The lifting of the suspension places the service contractors under legal obligation to put capital into the contract areas and hire Filipino engineers and technical workers to resume exploration,” he said.
De Lima: China favored
In the view of Senator de Lima, however, the lifting favors only Beijing. “When Duterte said before the UN that the Hague ruling is beyond compromise, he must have meant: unless China says otherwise.
Because here he is now taking a step closer to the realization of his joint exploration deal with his BFF [best friend forever],” de Lima said in a statement on Sunday. “That is the Duterte legacy: squeeze the wealth and interest of the country to make it a paradise for the China he serves,” de Lima added, in Filipino.
Risa: China must heed ruling
Senator Hontiveros is cautiously optimistic. Despite the welcome development, the senator asserted that joint oil exploration should only begin after China acknowledges and abides by the 2016 Permanent Arbitration Court ruling recognizing the Philippines’s exclusive sovereign rights over its EEZ in the WPS.
“Until China recognizes our victory in the Hague ruling, no negotiation on joint exploration will be productive. We should keep asserting that only the Philippines can undertake exploration in our EEZ. The requirements of the Constitution should be met and our sovereign ownership over the resources in our continental shelf must be recognized. Oil and gas reserves are abundant in the West Philippine Sea, that’s why they want to take it,” the senator said.
Hontiveros noted some estimates that the WPS contains as much as 130 billion barrels of oil, which experts say follows Saudi Arabia in terms of wealth of oil reserves. Retired Senior Associate Justice Antonio Carpio also said in his e-book “The South China Sea Dispute” that the WPS may be rich in methanol, a biofuel that could “fuel China’s economy for 130 years.”
Hontiveros said, “We must not easily grant China access to our seas, not only because of her rejection of the 2016 ruling but also because we need to safeguard money and resources that can get us through this pandemic. Let us give priority to our own welfare,” the senator said.
Insider trading
Meanwhile, Locsin said he had warned an early disclosure of the lifting to prevent insider trading. “I warned against any premature disclosure of proposed ventures to guard against insider trading. Why I don’t talk about ongoing MOU negotiations. Warning extends to any announcing alleged progress in negotiations including development as a way to jack up stock prices and sell out.”
The three-term lawmaker said the joint exploration is covered by the MOU on Oil and Gas Development that “I crafted which does not sacrifice an iota of our sovereign rights when the area is in disputed waters.”
“DFA [Department of Foreign Affairs] will continue to enforce the MOU to ensure that all projects follow a template that protects our sovereign rights and will denounce as a sellout any project that falls short of DFA’s very stringent requirements,” Locsin added.
Image credits: AP/Rolex Dela Peña