News / Economy

Oil Companies Try to Collaborate in Spite of S. China Sea Disputes

Philippine Energy Secretary Jericho Petilla talks to foreign correspondents during a forum with President Benigno Aquino, Oct. 23, 2013 in Manila. Philippine Energy Secretary Jericho Petilla talks to foreign correspondents during a forum with President Benigno Aquino, Oct. 23, 2013 in Manila.
x
Philippine Energy Secretary Jericho Petilla talks to foreign correspondents during a forum with President Benigno Aquino, Oct. 23, 2013 in Manila.
Philippine Energy Secretary Jericho Petilla talks to foreign correspondents during a forum with President Benigno Aquino, Oct. 23, 2013 in Manila.
The Philippines and China have developed an openly antagonistic relationship over their South China Sea territorial disputes. But while top officials trade accusations, some groups are looking for ways to compromise and jointly drill for oil and gas. 

The Philippines' only productive deep-water natural gas project is expected to run dry by 2024.

Click to enlargeClick to enlarge
x
Click to enlarge
Click to enlarge
The country is desperate to develop new oil and gas wells in the resource-rich South China Sea. Philippines Energy Secretary Jericho Petilla said he is hopeful about the potential for an unlikely collaboration between U.K.-based Forum Energy and state-owned China National Offshore Oil Corporation (CNOOC).

"The alternative is not to drill, probably forever... You have to look at the alternatives," he said. "You want to preserve your sovereign rights but at the same time- without actually compromising your sovereign rights, can you come up with commercial [exploration], because we need it."

Both the Philippines and China need the energy locked underneath the seabed, but they cannot agree on how to divvy it up, since each country claims the region as its own. 

While that larger issue remains unresolved, energy companies tied to the two nations are trying to find a path forward. Forum Energy is majority-owned by the Philippine-based Philex Petroleum, which has been trying to form a partnership with CNOOC to help it meet a contract to drill two natural gas wells at Reed Bank, just west of the Philippines western-most province, Palawan.

China claims indisputable sovereignty over practically the entire South China Sea, which Beijing says includes Reed Bank.  The Philippines, Vietnam, Malaysia, Brunei and Taiwan also claim partial or total stakes in the heavily traversed waters. 

Philippines officials say they are hoping to find a way forward by taking some lessons from a deal between Vietnam and China, which have an arrangement to explore waters in the Gulf of Tonkin in the South China Sea, although exactly how they would divvy up the proceeds of a productive well remains unclear.

Yang Fang, a researcher at the Center for Asia and Globalization at Singapore’s National University, says the two nations are relying on clauses in the U.N. Convention on the Law of the Sea (UNCLOS) that allow parties in a dispute to have a provisional arrangement regarding maritime borders.  And this provision would be untouched by any final determination of who owns what.

"Vietnam is more pragmatic and also maintains very open and regular communication with China both through the higher official level meeting and also the party to party communication.  So that the political will is strong and also they can bring it down to the practical level," said Yang Fang.

Skeptics of the Vietnam / China model, such as Carl Thayer, an expert on South China Sea disputes at the Australia Defense Force Academy, say the agreement gives both parties the appearance of cooperation, while the core disputes remain unresolved.

"China has hyped these agreements and if you look at them very carefully, they only represent very modest steps forward.  And they don't yet get into joint development," he said.

Despite optimism from Philippine energy executives about finding a way to strike a deal, President Benigno Aquino has been clear that any partnership between Forum Energy and CNOOC would have to abide by the Philippine position in the dispute.

"We maintain that the area that Forum Energy is exploring is clearly within our EEZ [exclusive economic zone] and therefore, any exploitation of the same has to be in conformity with our laws," he said.

The Philippines says China has encroached on its 370-kilometer exclusive economic zone numerous times and it filed a case in January with the International Tribunal on the Law of the Sea to try to reaffirm its claims. A ruling in that case could come as soon as next year.

You May Like

Beijing Warns Hong Kong Protesters, Cracks Down at Home

In suppressing protest news, China reportedly has arrested more than 20 people on the mainland who acted in support of Hong Kong pro-democracy protesters More

Competing Goals Could Frustrate Efforts to Fight Islamic State

As alliances shift and countries re-define themselves, analysts say long-standing goals of some key players in Middle East may soon compete with Western goals More

Child Sexual Exploitation to Worsen in SE Asia

Southeast Asia’s planned economic integration is a key step for boosting the region’s productivity, but carries downsides as well More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
The Legacy of Jimmy Carter: The Preacher from Plainsi
X
October 01, 2014 10:45 AM
It is common in the United States to see tourists flock to sites associated with America's presidents. Some are privately owned and others are run by the National Park Service or the National Archives -- but most have helped draw business and people into the towns and cities where they are located. As VOA’s Kane Farabaugh reports, there is one particular presidential hometown that is unique in what it has to offer those who make the trip.
Video

Video The Legacy of Jimmy Carter: The Preacher from Plains

It is common in the United States to see tourists flock to sites associated with America's presidents. Some are privately owned and others are run by the National Park Service or the National Archives -- but most have helped draw business and people into the towns and cities where they are located. As VOA’s Kane Farabaugh reports, there is one particular presidential hometown that is unique in what it has to offer those who make the trip.
Video

Video Hong Kong Protests Draw New Supporters on National Holiday

On the 65th anniversary of the founding of Communist China, Hong Kong protesters are hoping to stage the largest pro-democracy demonstration since the 1989 Tiananmen protests. VOA's Brian Padden visited one of the protest sites mid-day, when the atmosphere was calm and where the supporters were enthusiastic about joining what they are calling the umbrella revolution.
Video

Video India's PM Continues First US Visit

India's prime minister is on his first visit to Washington, to strengthen political and economic ties between the world's oldest and the world biggest democracies. He came to the U.S. capital from New York, the first stop on his five-day visit to the country that denied him an entry visa in the past. From Washington, Zlatica Hoke reports Modi seemed most focused on attracting foreign investment and trade to increase job opportunities for his people.
Video

Video Malaysia Struggles to Stop People Joining Jihad

Malaysian authorities say militant groups like the so-called "Islamic State" have used social media to entice at least three dozen Malaysian Muslims to fight in what they call "jihad" in Syria and Iraq. As Mahi Ramkrishnan reports from Kuala Lumpur, counterterrorism police are deeply worried about what could happen when these militants return home.
Video

Video Could US Have Done More to Stop Rise of Islamic State?

President Obama says airstrikes against Islamic State militants in Syria will likely continue for some time because, in his words, "there is a cancer that has grown for too long." So what if President Obama had acted sooner in Syria to arm more-moderate opponents of both the Islamic State and the Syrian government? VOA State Department Correspondent Scott Stearns reports from the United Nations.
Video

Video Treasure Hunters Seek 'Hidden Treasure' in Central Kenya

Could a cave in a small village in central Kenya be the site of buried treasure? A rumor of riches, left behind by colonialists, has some residents dreaming of wealth, while others see it as a dangerous hoax. VOA's Gabe Joselow has the story.
Video

Video Ebola Patients Find No Treatment at Sierra Leone Holding Center

At a holding facility in Makeni, central Sierra Leone, dozens of sick people sit on the floor in an empty university building. They wait in filthy conditions. It's a 16-hour drive by ambulance to Kailahun Ebola treatment center. Adam Bailes was there and reports on what he says are some of the worst situations he has seen since the beginning of this Ebola outbreak. And he says it appears case numbers may already be far worse than authorities acknowledge.
Video

Video Identifying Bodies Found in Texas Border Region

Thousands of immigrants have died after crossing the border from Mexico into remote areas of the southwestern United States in recent years. Local officials in south Texas alone have found hundreds of unidentified bodies and buried them in mass graves in local cemeteries. Now an anthropologist and her students at Baylor University have been exhuming bodies and looking for clues to identify them. VOA’s Greg Flakus has more from Waco, Texas.
Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.

AppleAndroid

World Currencies

EUR
USD
0.7866
JPY
USD
109.25
GBP
USD
0.6139
CAD
USD
1.1120
INR
USD
61.428

Rates may not be current.