News / Asia

Philippines Aims to Drill in South China Sea

Philippine Foreign Affairs Secretary Albert Del Rosario speaks during a media briefing at the foreign affairs headquarters in this picture provided by the Department of Foreign Affairs in Manila January 22, 2013.
Philippine Foreign Affairs Secretary Albert Del Rosario speaks during a media briefing at the foreign affairs headquarters in this picture provided by the Department of Foreign Affairs in Manila January 22, 2013.
Simone Orendain
This week, the Philippines announced it will take China to an international arbitration tribunal because of Beijing's claim of nearly the entire South China Sea. The years-old squabble has long deterred most oil and gas prospectors from the region - but not all of them. A Philippine company is hoping to work with a Chinese state-owned entity to drill for natural gas in the disputed waters.

On hold

Forum Energy is stuck in a holding pattern. The British-based company, which is majority-owned by a Philippine entity, had hoped to start drilling for natural gas off Reed Bank in the South China Sea, but it has not gotten government approval.

Forum began preliminary work to assess the area's potential reserves, but in early 2011 workers said they were chased away by Chinese vessels. More than five years ago this area showed a potential 3.4 trillion cubic feet of gas and possibly 10 trillion more.

Manuel Pangilinan, chairman of Philex Petroleum, which has a 65 percent stake in Forum Energy, is eyeing a partnership with the state-owned China National Offshore Oil Corporation (CNOOC) to drill in Reed Bank.

“There are no oil rigs in this country that are owned by Filipinos. So your options are only two: one, damn the torpedoes and send the [foreign] vessel in and see what happens,” Pangilinan said.

Or, the second, Pangilinan says, is to have a commercial arrangement with a Chinese company.

Such a joint venture is an option that China has consistently supported. Earlier this month, China’s ambassador in Manila told a local newspaper it would be better for Forum and CNOOC to get to work, instead of letting the reserves sit untouched while the two countries sort out their differences.

Authorities in the Philippine government are trying to figure out how to proceed. Energy Undersecretary Ramon Oca says they want to “make sure we are not violating” international law.

Island dispute

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The Philippines takes the position that China does not follow the United Nations Convention on the Law of the Sea, which delineates a country’s exclusive economic zone as 370 kilometers from its coastline. The Philippines says China’s claim of just about the entire South China Sea is illegal.

Foreign Affairs Secretary Albert del Rosario announced this week that the country is ready to bring it to international arbitration, which would be legally binding.

“On numerous occasions, dating back to 1995, the Philippines had been exchanging views with China to peacefully settle these disputes," noted del Rosario. "To this day, a solution is still elusive. We hope that the arbitral proceedings shall bring this dispute to a durable solution.”

Beijing responded by reiterating China’s claim that it has "indisputable sovereignty" over the South China Sea islands.

The Philippines has said it would support a Philippine-Chinese partnership in the region, provided it conformed to Philippine law, meaning parties would have to follow the 60 percent locally owned-to-40-percent foreign owned rule, among other requirements. President Benigno Aquino said recently he supports a joint partnership as long as royalties would go to the Philippines.


It is this question of royalties that poses the biggest challenge to a joint drilling partnership.

Li Mingjiang, coordinator of China Studies at the Rajaratnam School of International Studies at Singapore’s Nanyang Technological University, says the royalties issue is in many ways at their heart of their dispute.

“The implications are that if you follow Filipino laws and regulations, to some extent, China is conceding the sort of sovereign right to the Philippines in their waters with regards to the energy resources,” Li said.

Australia Defense Force Academy Professor Carl Thayer does not see a joint development partnership happening anytime soon.

“Does China want to accept that? And, if it did and worked in an area where the central government had a claim, it would seem to undermine the central government," Thayer noted. "And then now, DFA is having second thoughts. So I don’t think the prospects are very good.”

Thayer says that until the international arbitration filing, observers thought Forum’s proposal to partner with China was a potential step forward in the development and sharing of the contested resources. Now, with arbitration expecting to take at least a few years, that already slim chance of collaboration has become even less likely.

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Comment Sorting
by: matt from: dubai
February 08, 2013 1:17 PM
China has a policy: Deny all accusations and continue harassing others. It's certainly not the peaceful rise they submitted as propaganda.

by: saranghae from: philippines
January 28, 2013 6:10 AM
The Philippines is doing the right thing to settle the issue in the UN Arbitral Tribunal. Because Philippines believes that every nation must follow the international law that is being agreed by the international community. The UNCLOS. China and the Philippines are both signatories of that law. So, whatever decisions of UN, who owns really the said islands and waters that is belong to their exclusive economic zone, China must respect that!!! Because, If China won't follow the International law,. therefore China is an obedient country, and the International community will be disappointed to China's disobedience!!! China's nine -dash line is invalid!!! and the UNCLOS must prevail... so, therefore Philippines have the sole right to use, exploit their natural resources that is belong to their exclusive economic zone!!! And China must respect that!!! Understand???

by: Alf from: manila, the philippines
January 26, 2013 8:34 PM
Aquino is Chinese and since Aquino controls the Philippines, the South China Sea and the Philipines also belong to China!

Aquino should submit taxes to China like 500 years ago for the protection of Philippino Islands from sea pirates by Chinese navy and not to the present American government.

by: Wu from: USA
January 25, 2013 12:55 AM
To Jonathan, Bob and Andy. I don't see Chinese that live here in America like you guys. Chinese live here are the run away people from China before 1990. They rarely talk about China politics for it is heart break where China is the land government control that you don't have enough to eat, you can't say what you want, and you can't work where you like!
In Response

by: Shuami from: USA
January 25, 2013 2:51 PM
"To Jonathan, Bob and Andy. I don't see Chinese that live here in America like you guys."
Then my suggestion to you is that you broaden your circle of affiliates a little bit more.
"Chinese live here are the run away people from China before 1990. They rarely talk about China politics..."
Which neck of the woods are you from?
"...for it is heart break where China is the land government control that you don't have enough to eat, you can't say what you want, and you can't work where you like!"
May I suggest that you buy yourself a ticket to pay China a visit.

by: Jonathan huang from: canada
January 24, 2013 8:05 PM
again, I want to mention here. China has the identical claim on Diaoyu island and South China sea as Taiwan's.
ROC (Taiwan) published the sea map early as 1947. No any nation against this map until 70's 80's when oil and gas was found in this area. It is clear those countries want to steal China's resources.
ROC also long been put army on the biggest island of SCS. Which is a clear show of sovereignty.
In Response

by: Raymond Chang from: Bajo de Masinloc
January 25, 2013 5:53 AM
China also declared that it is the center and now all is under heaven. Nobody contested that nor complain. Therefore we are all under China.

These reasoning is flawed, and dont forget the internet is only made available in the 90's. Nobody saw China's published map nor anyone take it seriously.

by: Danidanado from: Philippines
January 24, 2013 6:19 PM
I take exception to the comment made that the Philippines have arrested and KILLED Chinese fishermen. Arrested, yes, boats confiscated, yes, killed? Hasn't happened that I know of. The arrogance fo Chinese fishermen to fish in local waters as near as fifty miles off shore would not be tolerated by any country, nor should it be. Typically, the Philippine coast guard will find Chinese fishermen harvesting Giant Clams (illegal for Philippine fishermen) and arrest them and confiscate their boats. The Chinese Government posts their bail and they disappear. The current situation at the Scarborough Shoals started the same way. But when the Philippine Coast Guard attempted to leave with their prisoners three Chinese "Surveillance" vessels blocked their exit. After weeks of hotly contested negotiations, both countries agreed to withdraw from the area to avoid conflict. The Philippine Coast Guard released their prisoners and their boats and left. The Chinese however, have not. They remain at Scarborough shoals in violation of the agreement, and the agreement on conduct of the seas previously agreed on. The Chinese cannot be trusted to honor any agreement.
I also take exception to the statement that China discovered those islands and thus own them. I have sailed on a modern Chinese "Junk" and there is no way that those sail boats of centuries ago could venture out that far. China must adhere to International law of Today and the UNCLOS if there is to be any peaceful solution to this conflict. That means that the Chinese must leave the Scarborough Shoals which is only 123 miles from where I live. Ms Clinton gave lip service of American support for the Philippine position, I hope Mr. Kerry does more than that.
In Response

by: Anonymous
January 25, 2013 12:59 PM
Chinese will not leave the Scarborough Shoals since it's Chinese territory, why Chinese should leave it's own territory? My point here is again, it's close to you, it doesn't mean that's yours. The UNCLOS only approved in 1982. So are you agree Taiwan is China's since it's only 160 miles away from China? you are not, same reason here.
In Response

by: ANdy
January 25, 2013 12:53 PM
Chinese can take any fish in it's own territory, if there are problem, it's the business of CHinese fishing guards to deal with, not Phillipins!

by: equalearth from: global
January 24, 2013 6:03 PM
it's the beginning of wars all over the planet for finite ressources like oil and gas that are needed to fuel the energy needs of ongoing global overpopulation - next will be the Falklands Islands now that oil and gas has been found....

by: Davis K. Thanjan from: New York
January 24, 2013 11:09 AM
Philippines has territorial dispute with China regarding islands in the South China Sea. Philippines did the right thing to refer their territorial dispute to international arbitration tribunal.
China has similar disputes with Taiwan, Japan, Vietnam, Malaysia and Brunei regarding islands in the South China Sea. These countries should follow the example of Philippines and refer all their territorial disputes to the international arbitration tribunal.

Any joint project to drill for natural resources should be postponed till the decision of the international arbitration tribunal. Agreeing for joint ventures with Chinese government energy companies in these disputed islands and islets is equivalent to relinquishing the territorial claims of other countries.
China does not want to refer their territorial disputes to the international arbitration tribunal because their territorial claims are not in compliance with the UN Convention on the Laws of the Sea (UNCLOS).

The status quo of disputes is advantageous for China. China welcomes the suggestion of the disputed countries for joint ventures. Then China can exploit all the natural resources in the South China Sea, which is the main aim of China in creating territorial disputes. By agreeing for joint energy ventures, China hope to gain at least half the energy resources in the South China Sea. China claims (1) all the islands and islets in the South China Sea, (2) the whole South China Sea as its territorial waters (3) very important shipping lanes leading to the countries in the Pacific Rim (4) the only unopposed naval and military power in the region and (5) all the natural resources such as oil, gas and fisheries in the South China Sea.
In Response

by: Wu from: USA
January 25, 2013 12:42 AM
Davis, you got good points here. It's nice for people to see that.

Answer to Bob and Andy from Calif. China is hungry for resources to growth in order to compete with the West. China sacrifced their own people life in manufactories to bring dollars home. Now they invade their neighbors' front yards and back yards. How ugly and stinky!
It appears that China like a big brother pushing little brother around for a bit of oil.
I have traveled to HongKong in 2004 and saw an advertisement China best machine. These machines is breakdown after 6 months. This means that in modern day China products are scraps, dirty cheap compared to the West! How could they make ship traveled 5km/day to far, far away islands?

In Response

by: Bob from: Sunnyvale, CA
January 24, 2013 1:23 PM
Philippines cannot fart without permission from the USA, let along aggressively confront the largest economy in Asia. It should be obvious to any thinking person that Philippines being goaded to challenge China (like Vietnam, Japan, and India) by the USA. This Obama "Look East" policy is an extension of a well played tactic by the USA. It's a mirror image of the "Open Sores" operation the CIA ran in the 50-60's, where CIA financed and trained (on US soil) Tibetan "freedom" (more like aristocrats who lost out) fighters. The goal of the "Open Sores" operation like the "Look East" policy is to keep China unbalanced, eyes off the ball, and minding business with small frys like the Philippines.

Philippines is playing a game of smoke and mirrors with the UN arbitration. It knows fully well China will not cede to UN arbitration for territorial dispute.

All China needs to do is ignore the Philippines, and pounce when necessary.
In Response

by: Andy D. from: Arcadia CA
January 24, 2013 12:04 PM
Philippine did not mention what caused this series of disputes. Philippine government and military arrested and killed fishermen; for a long time, China tolerated what they did in South China Sea, but not anymore. China first discovered those islands on South China Sea, and we have enough evidence to prove it, so we will never give it away. Philippine uses "International Law" against China because the law doesn't really rely on historical evidence. If Philippine wants to be a clown, China will make it look like a clown.

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