Joint exploration

“Oil is power. I don’t just mean power as in energy. I mean power, as in being a primary factor in the process of asserting and maintaining political dominance and control. Oil is needed to grow food, build infrastructure, advance technology, manufacture goods, and transport them to market. It lubricates the mechanisms of both national and international politics. Those who can consistently get their hands on the most oil, at the best prices… will rule.” 

This excerpt from an article by oilprice.com. though published almost nine years ago, gains relevance once more as the country’s inflation rate hit record levels. Some say it is due to the effects of our tax reform program under TRAIN although there are those who blame soaring crude oil prices.

If only the Philippines had a cheaper source of energy.

The Malampaya natural gas project accounts for half of the Luzon grid’s requirements and 30 percent of the entire power needs of the country. Unfortunately, the gas project in offshore Palawan’s life expectancy is only up to 2029 and will start to diminish in 2024.

According to the Department of Energy, as of 2016, of the total installed power capacity, natural gas accounts for 16 percent while renewable energy (geothermal, hydro, biomass, wind and solar) contributed 32.5 percent, coal 34.6 percent, and oil-based, 16.9 percent.

Our vehicles use petroleum products like gasoline and diesel. Households use LPG to cook their food. The manufacturing sector uses diesel engines.

When the price of fuel goes up, everything becomes more expensive.

Imagine what would happen to our economy if the Philippines becomes an oil producer.

According to independent Chinese estimates, the disputed waters in the South China Sea has over 100 billion barrels of oil. But more conservative estimates place the volume at seven billion barrels of oil and about 900 trillion cubic feet of natural gas. The US Geological Survey (USGS) estimated in 1993 discovered and undiscovered oil reserves in the offshore basins of the South China Sea at 28 billion barrels.   

A report by Forbes.com said a USGS study in 2010 showed that there is a 95 percent chance that there is at least 750 million barrels of oil in the South China Sea Platform, a median chance of around two billion barrels, and a low probability (five percent) of over five billion barrels.

Unfortunately, these territories are the subject of a dispute between the Philippines and China. But even assuming for the sake of argument that it is undisputably ours, we do not have the financial resources and technical expertise to conduct our our exploration and development activities.

If Malacanang plans push through though, the Philippines may be able to have China as its partner in exploring these vast untapped resources.

About a month ago, Foreign Affairs Secretary Alan Peter Cayetano said the Philippines had officially relayed to China the creation of a technical working group (TWG) on the possible joint exploration by the two countries in the disputed West Philippine Sea (WPS). President Duterte had approved the creation of the TWG, provided it would only involve a possible commercial agreement with China.  

 According to Presidential Spokesperson Harry Roque Jr., Malacañang expects to come up with a joint exploration deal with China before the visit of Chinese President Xi Jinping later this year. The Chinese leader is expected to visit Manila after taking part in the APEC Summit in Papua New Guinea in November.

Malacañang’s plan is likely to get the support of the Congress, particularly from House Speaker Gloria Macapagal Arroyo, who as the country’s leader signed 14 years ago a Joint Marine Seismic Undertaking (JMSU) with China. Vietnam joined the deal a year later making it a trilateral pact. 

Arroyo signed the agreement for seismic undertaking for certain areas in the South China Sea by and between China National Offshore Oil Corporation and Philippine National Oil Company in 2004.  But Bayan Muna filed a petition before the Supreme Court in 2008, asking it to void the JMSU, which lapsed without being renewed on June 30 that same year.  In 2014, Bayan Muna asked the High Court to rule on the petition but the latter has yet to decide on the issue. 

In the Senate, several lawmakers appear supportive of this proposed joint exploration arrangement under the Duterte administration provided that it is confined to a commercial venture.

Even Supreme Court Associate Justice Antonio Carpio has been quoted as saying that Chinese companies can be technical and financial contractors of the Philippine government or Filipino companies under Philippine laws, but not Chinese law, just like the set-up in Malampaya where Shell is the technical and financial contractor of the Philippine government under Philippine law.

Former Senate President Juan Ponce Enrile had defended President Duterte’s pragmatic non-confrontational approach, saying the government needs to deal with this issue without recklessly exposing the Philippines to possible retaliation. 

He said that Malampaya will be gone and our best chance will be Benham Rise, but even that will entail a big amount of investment and we have to have a Navy to guard it.

 The West Philippine Sea, believed to be rich in oil and gas deposits, is an opportunity waiting to be tapped and developed. But we can only go as far as sending scientists to the area to conduct study missions because neither the government nor our private sector has the financial capability to shoulder the mammoth costs needed for its exploration and development.

President Duterte’s pragmatic approach to this territorial dispute, which is actually constitutionally and legally sound, will immensely benefit the Filipino people. 

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