Philippines free to rescind oil deal with China

MANILA, Philippines — The Philippines is free to walk out of the memorandum of understanding (MOU) on joint oil and gas development with China if the contents of the document would be found to be against national interests, Malacañang said yesterday.

Presidential spokesman Salvador Panelo gave the assurance as senators and some groups were demanding full disclosure of the details of the MOU signed during the recent visit of Chinese president Xi Jinping.

“Why not? Yes, definitely,” Panelo said when asked if the Philippines could still walk out of the MOU.

“If serious studies show it’s wrong, you know, in law there is such a thing as rescission of contract. If the contents of the contract do not contain the intention of the parties, you can rescind it,” he pointed out.

He said any deal should always be favorable to the Philippines, and not just to China.

Panelo said the MOU only means that the Philippines and China have “agreed to agree” on certain matters about oil and gas exploration and development.

He said the MOU is not legally binding as the two parties are not yet done negotiating on the matter.

The signing of the MOU, he explained, means guidelines and talking points will be worked out, which will lead to an official agreement.

“The predicate is: is this agreement legal as far as we are concerned, under the Constitution? Number two: is this beneficial to us? Otherwise we won’t allow it,” he added.

“After that draft, it has to go over the other party, and will look over whether or not the contents of your agreement are incorporated therein. Otherwise, the party will object to that or will revise it until they reach an agreement on what exactly will be the final draft,” he said in a chance interview.

Panelo said it is premature to criticize the MOU, which is one of 29 deals signed at Malacañang during Xi’s visit.

The administration has not yet released copies of the MOU.

“I suppose it’s the DFA (Department of Foreign Affairs) secretary who will be releasing that. So we’ll have to ask him,” Panelo said, referring to DFA chief Teodoro Locsin Jr.

Former foreign affairs secretary Albert del Rosario said he and acting Chief Justice Antonio Carpio were able to see “the signed document which is being referred to.”

Del Rosario said Carpio believes “that what was signed is an agreement to negotiate an oil and gas cooperation, and we are safe with it. Nothing is being given away.”

But Del Rosario stressed the need for “full transparency,” adherence to the Constitution and upholding of the outcome of the international arbitration.

Asked whether the arbitral ruling that favored the Philippines would be considered in the negotiations with China, Panelo said: “As I have repeatedly said, the arbitral ruling is there forever, permanently. Nobody can take that away from us.”

The Permanent Court of Arbitration based in The Hague voided China’s expansive maritime claim in 2016 but the Chinese government refused to recognize the ruling, which stemmed from a complaint filed by the previous Aquino administration in 2013.

Careful study

Panelo emphasized a joint development would take time to materialize as it has to be carefully studied to make sure it complies with existing laws.

“We have to be very sure that one, it is constitutionally firm; number two, will we benefit from that?” the presidential spokesman said, adding a draft agreement would be subject to further scrutiny.

Panelo said President Duterte would lift the moratorium on all exploration and drilling works in the West Philippine Sea if advised by the DFA to do so.

The moratorium, implemented in 2012 during the Aquino administration, covered service contracts 72 in Recto Bank, a gas-rich area 80 nautical miles from Palawan; and 75 in northwest Palawan.

“If the recommendation of the SFA (secretary of foreign affairs) and the President thinks it is best suited to pursue and make forward our interests, he will do it,” he said.

“The President listens to advice and recommendations coming from members of his Cabinet,” Panelo said. 

“But ultimately it’s the President’s call and always based on whether or not it is for the best of the country.” 

Locsin, meanwhile, emphasized that the signed MOU would not jumpstart a joint exploration with China, saying it’s just an “architecture” for future talks on oil exploration.

In an interview on CNN Philippines’ “The Source,” Locsin said the agreement does not specify the location of the oil and gas exploration and that it only creates a joint intergovernmental steering committee and one or more working groups to help Manila and Beijing come to an agreement within 12 months from the signing of the MOU.

But if the deadline lapses without the parties’ reaching an agreement, the MOU will remain valid.

“This is valid and it will endure. This is the master framework,” Locsin said. “No other country is interested in the development.” He revealed it was he who wrote the MOU.

“I decided I’m going to write that agreement, and the Chinese and that’s why I’m going to ask for their permission to release this, I’m not going to listen to anyone else because they trusted me enough to produce a memorandum of understanding, more or less along the way, New York lawyers would do it, no-nonsense, straight to the point, hardly any comments,” he said.

Locsin co-chairs the committee with Chinese foreign minister Wang Yi. Energy Secretary Alfonso Cusi and his Chinese counterpart are the designated vice chairpersons.

The committee “will be responsible for negotiating and agreeing the cooperation arrangements in maritime areas to which they will apply, and deciding the number of working groups to be established and for which part of the cooperation area each working group is established,” Locsin said.

“Each working group will negotiate and agree on inter-entrepreneurial, technical and commercial arrangements that will apply in the relevant working area,” he added.

China authorizes China National Offshore Oil Corp. as the Chinese enterprise in each working group.

“The Philippines will authorize other enterprises because that’s how we do things, with service contracts, by giving them service contracts, or the Philippine National Oil Co.”

The MOU, he said, does not create rights or obligations under international or domestic law. Nature of information is confidential and any other matters relating to the memorandum may be referred jointly by the two governments to the committee or working group for consultation. – With Pia Lee-Brago

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