NOW that the ball has started rolling for the possible joint exploration by the Philippines and China in the West Philippine Sea, analysts are wary of the risks it will bring. At the same time, however, they see that this can be averted if the technical working group (TWG) entrusted with the hard task of crafting the nitty-gritty of such an initiative will do its job well.
Experts also believe that the TWG must ensure that any joint exploration deal will be in accord with the Philippine Constitution and will not imperil what the country has already won in the arbitral ruling by the Permanent Court of Arbitration in The Hague in July 2016.
At the same time, they concede that allowing the status quo to continue—where there will be no progress in petroleum exploration and development—could be fatal to an economy with high growth projections.
Meanwhile, both Victor Andres C. Manhit, president of Stratbase ADR Institute, and maritime law expert Jay Batongbacal did not discount the possibility that China may use the deal as a trap for the Philippines to later give in to what it wants.
Batongbacal, director of the University of the Philippines Institute for Maritime Affairs and Law of the Sea, said the TWG’s role is crucial since the group has to be the one to watch out for the Philippine interest.
He added the TWG’s work is tough, since they need to do a lot of homework and research to ensure that this joint development “does not end up becoming a means for the Philippines to surrender some aspect of what it has already won in the arbitration.”
More than two years since the historic victory of the Philippines when The Hague-based UN tribunal issued the landmark decision invalidating China’s massive claims of ownership under its nine-dash-line principle in the South China Sea, Beijing still does not recognize the arbitral ruling.
The arbitral decision had also underscored that the Asian superpower has no legal basis to claim historic rights within the sea areas falling within their “nine-dash line.”
TWG ‘approved in principle’
Last week the President approved “in principle” the establishment of a TWG on the joint exploration, according to Foreign Secretary Alan Peter Cayetano.
The secretary said the TWG will have representatives from the Departments of Environment and Natural Resources, Energy and of National Defense; National Security Council; National Intelligence Coordinating Agency; and the Department of the Interior and Local Government.
To advise and help in the negotiation stage, a legal team with representatives from the Department of Justice and the Office of the Solicitor General will be formed.
Cayetano said China is also ready with its own TWG and is hoping that the framework agreement between the two countries could be signed in September.
Batongbacal said the agreement with China could either be so simple that will not help at all, or be too detailed that the country might end up giving up more than it is supposed to.
“The very important part there [that the TWG should watch out for] is the aspect of control and exclusive sovereign rights. They [TWG members] should not be placed in a position that because of this deal we will be unable to continue exploring and developing our own resources without China and we might end up being locked in this kind of deal,” he said.
Batongbacal said he doesn’t rule out that possibility, adding that China doesn’t have an urgent need for these resources.
For Manhit, there is a need for strong safeguards in forging this deal with China, such as the possibility of filing cases against China if they deviate from what was agreed upon.
“There is a saying that the greatest equalizer among nations is international law. Because we are small compared to them, they’re big so you have to build on the contract, on the strength of the law. What can we do if we don’t put that safeguard? Then we basically sell ourselves out. We have to protect our nation’s interest,” he said.
Manhit hopes the government will be mindful of its actions that can affect future generations.
“I hope that our government [officials] remember that they are accountable to the Filipino people and their actions today will have an effect [beyond] the term of office of this administration,” he said. “I use the word accountability. They will be made accountable by the Filipino people or the Philippine republic, so they need to take that into consideration, just like anyone who negotiated for Shell Malampaya,” he added, referring to the gas field in Palawan operated by a foreign-led consortium of experienced petroleum players, with a revenue-sharing scheme between the private companies and the Philippine government.
In Manhit’s view, negotiations for the Shell Malampaya went well, because they satisfied the profit requirements of Shell and its consortium partners, but more so, the Filipino people. Furthermore, no money was spent by Philippine taxpayers in that joint exploration, while they got a stable energy source and a substantial revenue stream.
For the country to avoid being trapped in a bad deal, Manhit stressed the importance of consulting with the Philippine lawyers who built the case that brought the country victory in The Hague in 2016. “They would understand the limits or what we got from the arbitral award since they studied it already,” he said. “It’s best to consult them [to ensure] that we are not violating any award we got from the arbitral decision in 2016.”
These lawyers, he noted, are some of the best legal minds, and are committed to protect the interest of the Filipino people. They are not beholden to China and are not politically affiliated with either President Duterte or Chinese President Xi Jinping.
There are urgent reasons for extracting resources and there is nothing wrong with working with China, Manhit said, as long as it does not violate any part of the UN arbitral decision and the deal works within the bounds of Philippine laws.
“China should be welcomed just like any investment from China, Japan or any other country, just like Shell Malampaya. This is a consortium of Western nations. We’re happy to serve them but it is within the laws of the Philippines,” he said.
Other players
Manhit and Batongbacal both believe the Philippines could also work with other countries aside from China.
For Manhit, it would be best for the country to also explore possible contracting or exploration with other big nations that have the technical and financial capacity, but the same rules should apply—everything is done in accordance with Philippine laws.
“I always believe that we should be open to anyone who can give us the best deal or partnership. At the end of the day, what we should keep in mind is we are here for the interest of the Filipino nation,” he said. “What’s best for the Filipino nation today in the long term is more important than what is best for the political concern of certain individuals. So what’s best for the Filipino nation should be our primary goal.”
Batongbacal said China is not just the “only kid in town” when it comes to petroleum development, as the government can tap other countries and corporations, if it has the political will to do it.
It is not a matter of life and death for the country to push through with the joint exploration, he said, but added that a power crisis will ensue if there is no progress on petroleum exploration and development, particularly to fill in what the country will lose from Malampaya when it shuts down around 2024 or 2025.
“There are other ways to fill in that gap, but more likely it’s going to be more expensive and more environment-costly,” he said.
‘Only way forward’
Because of the suspension of all petroleum exploration, which has not been lifted until now, the joint exploration track seems to be the “only way to move forward.”
The track record of China in joint exploration deals is also “not really encouraging,” Batongbacal said, noting that its deals with Japan, Korea and Vietnam were not successful for various reasons.
Assuming the Philippines-China joint exploration deal will be successful, Batongbacal said this will be a new thing.
Cayetano has since defended the decision on the joint exploration, saying that the country will not allow the oil and gas to be harvested “unilaterally.”
He earlier noted that the Philippines will not agree unless the resulting deal is as good as, or better than the Malampaya agreement.
The Philippine government and the Malampaya consortium have a 60-40 sharing of revenues for the gas deposits off the shore of Palawan.
Given that the Duterte administration boasts friendlier ties with China compared to the previous administration, getting a comparative or even better deal than the Shell Malampaya should be a realistic goal.
Cayetano has since said both parties have to temporarily set aside their claims to both territory and sovereign rights for the joint exploration to push through.
To be sure, the work of any TWG will not be easy or simple, but the challenge should be enough motivation to move forward.
