Unexplored

Many years from now, we will look back with regret at our failure to fully exploit our resources and use them to enhance the nation’s development. The failure will be due to oligarchic interests clothed in nationalist rhetoric.

Last week, the Supreme Court ruled as unconstitutional the Joint Marine Seismic Undertaking, a tripartite executive agreement between the Philippines, China and Vietnam. The agreement, which would have enabled scientific tests to determine oil and gas deposits, was immediately contested by a group composed mainly of leftwing personalities.

The ruling may seem academic. The agreement in question expired in 2008. But, regardless of the mind-boggling delay in the Court, this ruling sets more stringent ownership requirements for even the most preliminary exploratory activities.

The strategic Malampaya gas exploration and exploitation, contributing much of our current energy mix, would not have prospered in the light of this ruling. The Malampaya wells managed to go around the economic nationalism of our Constitution by being packaged as a “service agreement” where foreign companies put up 90 percent of the investment and the Philippine government reaped 60 percent of the revenues.

No large multinational company today – possessing the capital, the technology and the pool of talent required to undertake such a large project – would enter into such an arrangement ever again. Both Shell and Chevron have sold down their stakes in Malampaya.

Meanwhile, the gas deposits in Malampaya are close to exhaustion. If these deposits are depleted without the Philippines developing new wells, the country will fall into an energy abyss. About 40 percent of Luzon’s present energy requirements is supplied by generating plants using Malampaya gas.

We cannot drill new gas wells without first exploring for deposits. With the more stringent ownership requirements implied by the court ruling, we will have difficulty amassing the capital and knowhow required to perform that.

It will take more than a decade from exploration to actual drilling to develop new natural gas sources. Malampaya will be exhausted in as early as four years. Do the math. Our energy security is seriously compromised.

Only the largest Filipino conglomerates can raise the capital to meet the nationality requirements implied by the court ruling. The fate of our energy sufficiency is in their hands.

While the Supreme Court ruling is much delayed, it is not surprising. The magistrates simply affirmed the economic nationalism of the 1987 Constitution. They are, after all, agents of constitutional dictate.

China and Vietnam, for their part, are not saddled by obsolete economic orthodoxies. Their oil and gas industries are state-owned and enjoy more elbowroom to enter into exploration and drilling contracts. They will explore and drill where we cannot because of constitutional inhibitions.

I cannot see why the leftists are celebrating this ruling.

Illegal extraction

Unfortunately, our xenophobic vigilance over foreign investors in extractive industries (even as we need their capital and technologies) is not matched by vigilance over illegal and destructive extraction of our natural resources by Filipino companies.

We noted in this space the presence of a small fleet of Chinese reclamation vessels in Manila Bay apparently working on filling up a large area for a major property development. The same Chinese reclamation company participated in building fortified islands in the contested South China Sea. This project is proceeding even as the boundaries of the reclamation are still contested in court and in the absence of a clearance to proceed from Malacañang.

It turns out that a Filipino company, Golden Sands, enjoys a monopoly in supplying sand for the Manila Bay reclamation project. A major shareholder of this company is Halrey Construction Inc. owned by the Halili family of Sta. Maria, Bulacan. Sisters Cel Halili, wife of Dennis Trajano, and Meah Halili, married to Edwin Rodriguez, belong to this family. Edwin Rodriguez is the brother of former executive secretary Vic Rodriguez. Trajano is an associate of Archipelago Philippine Ferries Corp. president Christopher Pastrana who the former executive secretary tried, but failed, to get appointed head of the Philippine Ports Authority – defying conflict of interest concerns.

The sand being dumped into the reclamation project now proceeding feverishly is quarried from Bucao River in Zambales province. Golden Sands does not have a permit from DENR Zambales to engage in quarrying. Instead, they are using the permit granted another entity to quarry.

This is in violation of the law guarding against theft of minerals. The law dictates that the permittee directly undertakes the quarrying instead of leasing its rights to a third party. Under existing regulations, the third party is criminally liable for removing minerals owned by the Government. Upon conviction, the third party may be both jailed and fined for the offense. In the case of quarrying sand from the Bucao River, Golden Sands is the third party.

The law is quite clear. Extracting minerals using claims leased, held or owned by any other person constitutes an offense. Yet the provision appears to be flouted in the case of Bucao River and Golden Sands.

The fact that the quarried sand is used to fill up a reclamation area in the heavily congested Manila Bay compounds the matter.

The communities directly affected by the large-scale quarrying along Bucao River should make their voices heard. The DENR must provide us clarity about what is happening in an area under its jurisdiction.

If the DENR appears intimidated, the current Executive Secretary must tell us what the state of play is regarding this reclamation.