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.
TEXT SIZE - +
— 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

Wikipedia Proves Useful for Tracking Flu

Technique gave better results than Center for Disease Control (CDC) and Google’s Flu Trends More

Turkish Law Gives Spy Agency Controversial Powers

Parliament approves legislation to bolster powers of intelligence service, which government claims is necessary to modernize and deal with new threats Turkey faces More

Video Face of American Farmer Changing

Average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Face of American Farmer is Changingi
X
Mike Osborne
April 18, 2014
The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Face of American Farmer is Changing

The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Donetsk Governor: Ukraine Military Assault 'Delicate But Necessary'

Around a dozen state buildings in eastern Ukraine remain in the hands of pro-Russian protesters who are demanding a referendum on self-rule. The governor of the whole Donetsk region is among those forced out by the protesters. He spoke to VOA's Henry Ridgwell from his temporary new office in Donetsk city.
Video

Video Drones May Soon Send Data From High Seas

Drones are usually associated with unmanned flying vehicles, but autonomous watercraft are also becoming useful tools for jobs ranging from scientific exploration to law enforcement to searching for a missing airliner in the Indian Ocean. VOA’s George Putic reports on sea-faring drones.
Video

Video New Earth-Size Planet Found

Not too big, not too small. Not too hot, not too cold. A newly discovered planet looks just right for life as we know it, according to an international group of astronomers. VOA’s Steve Baragona has more.
Video

Video Copts in Diaspora Worry About Future in Egypt

Around 10 percent of Egypt’s population belong to the Coptic faith, making them the largest Christian minority in the Middle East. But they have become targets of violence since the revolution three years ago. With elections scheduled for May and the struggle between the Egyptian military and Islamists continuing, many Copts abroad are deeply worried about the future of their ancient church. VOA religion correspondent Jerome Socolovsky visited a Coptic church outside Washington DC.
Video

Video Critics Say Venezuelan Protests Test Limits of Military's Support

During the two months of deadly anti-government protests that have rocked the oil-rich nation of Venezuela, President Nicolas Maduro has accused the opposition of trying to initiate a coup. Though a small number of military officers have been arrested for allegedly plotting against the government, VOA’s Brian Padden reports the leadership of the armed forces continues to support the president, at least for now.
Video

Video More Millenials Unplug to Embrace Board Games

A big new trend in the U.S. toy industry has more consumers switching off their high-tech gadgets to play with classic toys, like board games. This is especially true among the so-called millenial generation - those born in the 1980's and 90's. Elizabeth Lee has more from an unusual café in Los Angeles, where the new trend is popular and business is booming.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
AppleAndroid

World Currencies

EUR
USD
0.7217
JPY
USD
102.17
GBP
USD
0.5949
CAD
USD
1.1009
INR
USD
60.326

Rates may not be current.