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

Could Nemtsov Threaten Putin in Death as in Life?

Dynamic and debonair opposition leader had supported liberal economic reforms, criticized Russian president's aggression in Ukraine More

Oil Smuggling Highlights Challenges in Shutting Down IS Finances

Pentagon spokesman says Islamic State 'certainly continues to get revenue from the oil industry black market' but that airstrikes have made a dent More

India Focuses on Infrastructure, Investment to Propel Economy

Government expects economy to grow at 8 to 8.5 percent in next fiscal year More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
US Supreme Court Hears Hijab Discrimination Casei
X
Katherine Gypson
February 25, 2015 11:30 PM
The U.S. Supreme Court has heard opening arguments in a workplace religious discrimination case that examines whether a clothing store can refuse to hire a young woman for wearing the headscarf she says is a symbol of her Muslim faith. Katherine Gypson reports from the Supreme Court.
Video

Video US Supreme Court Hears Hijab Discrimination Case

The U.S. Supreme Court has heard opening arguments in a workplace religious discrimination case that examines whether a clothing store can refuse to hire a young woman for wearing the headscarf she says is a symbol of her Muslim faith. Katherine Gypson reports from the Supreme Court.
Video

Video Falling Gas Prices Hurt Nascent Illinois Hydraulic Fracturing Industry

Falling oil prices are helping consumers purchase cheaper petroleum at the pump. But that’s made hydraulic fracturing or “fracking” less economically viable for the companies in the United States invested in the process. VOA’s Kane Farabaugh reports on one Midwestern town that was hoping to change its fortunes by cashing in on the next big U.S. oil boom.
Video

Video Fighting in Sudan's South Kordofan Fuels Mass Displacement

Heavy fighting in Sudan's South Kordofan state is causing hundreds of thousands to flee into uncertain conditions. Local aid organizations estimate as many as 400,000 civilians have been internally displaced since the conflict began more than three years ago, while another 250,000 have fled across the border to refugee camps in South Sudan. VOA's Adam Bailes reports.
Video

Video Lao Dam Project Runs Into Opposition

A Lao dam project on a section of the Mekong River is drawing opposition from local fishermen, international environmental groups and neighboring countries. VOA's Say Mony visited the region to investigate the concerns. Colin Lovett narrates.
Video

Video A Filmmaker Discovers Her Biracial Identity in "Little White Lie

Lacey Schwartz grew up in an upper middle-class Jewish family, in a town in upstate New York where almost everyone she knew was white. She assumed that she was, as well. Her recent documentary, Little White Lie, tells the story of how she uncovered the secret of her true racial background. VOA’s Carolyn Weaver has more on the film.
Video

Video Deep Under Antarctic Ice Sheet, Life!

With the end of summer in the Southern hemisphere, the Antarctic research season is over. Scientists from Northern Illinois University are back in their laboratory after a 3-month expedition on the Ross Ice Shelf, the world’s largest floating ice sheet. As VOA’s Rosanne Skirble reports, they hope to find clues to explain the dynamics of the rapidly melting ice and its impact on sea level rise.
Video

Video US-Cuba Normalization Talks Resume Friday

Negotiations aimed at normalizing diplomatic relations between the U.S. and Cuba resume Friday. On the table: lifting a half-century trade embargo and easing banking and travel restrictions. There's opposition in Congress, but some analysts say there may be sufficient political and economic incentives in both nations for a potential breakthrough this year. VOA's Mil Arcega reports.
Video

Video Pakistan's Deadline For SIM Registration Has Cellphone Users Scrambling

Pakistani cell phone users have until midnight Thursday to register their SIM cards, or their service will be cut off. While some privacy experts worry about government intrusion, many Pakistanis are just worried about keeping their phone lines open. VOA Deewa reporter Arshad Muhmand has more from Peshawar.
Video

Video Myanmar Warns Factory Workers to End Strikes

Outside Myanmar's main city Yangon, thousands of workers walked off their jobs earlier this month demanding a doubling of their wages, pay raises after a year and input from labor unions on industrial regulations. Since Friday, the standoff has grown more tense as police moved in to disrupt the sit-ins, resulting in clashes that injured people from both sides. VOA correspondent Steve Herman visited industrial zones which have become a focus of Myanmar's fledgling workers rights movement.
Video

Video Oscar Winners Do More Than Thank the Academy

The Academy Awards presentation is Hollywood’s night to reward the best movies from the previous year. It’s typically a lot of glitter, a lot of thank you’s, a lot of speeches. But many of this year’s speeches carried messages beyond the thank you's. VOA’s Carolyn Presutti takes a look.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

World Currencies

EUR
USD
0.8896
JPY
USD
119.26
GBP
USD
0.6475
CAD
USD
1.2451
INR
USD
61.816

Rates may not be current.