Deal or No Deal: Prospects on Philippines-China Joint Oil Drill

By Chester B Cabalza

Blogger's Notes:
Commentary of an Academic 
(Copyright @ 2017 by Chester B Cabalza. All Rights Reserved).

Photo courtesy of Wikipedia

In a twist of fate, Chinese Foreign Minister Wang Yi agreed to support Manila’s offer to consider a joint energy exploration in the Reed Bank, an underwater of 8,866 square-kilometer tablemount believed to hold significant oil and gas deposits in the tension-laden South China Sea. Contrary to China’s threat using maritime attack to Vietnam of its intent to do a unilateral activity in the Spartly Islands if drilling continued, as recourse the Southeast Asian claimant-country immediately halted the plan. 

In the span of one year, President Rodrigo Duterte befriended a giant neighbor, visited China consecutively, and in between mounted an independent foreign policy to diversify relations with Beijing. In a struggle to repair the damaged friendship between the two East Asian countries, only July last year when the Permanent Court of Arbitration in The Hague ruled out in favour of the petitioner of the landmark maritime case awarding to the archipelagic state exclusive sovereign rights to access offshore hydrocarbons and natural gas within its 370-kilometers exclusive economic zone where the Reed Bank is located.Given these antecedents, the big question that summons scores of observers is, will this be the beginning of a brighter future for the estranged Asian neighbors?

In the past years, contest over potential hydrocarbon resources in the South China Sea has catalyzed unilateral oil explorations undertaken by several claimant states, particularly the Philippines, Vietnam, and Malaysia as well as their respective legislation of sovereignty claims such as baselines and continental shelf submissions. The Philippines successfully discovered a natural gas field in 1992 building the Malampaya Natural Gas to Power Project, a joint government and private sector undertaking, considered as the single most expensive project of the Philippine government. The gas reservoir is located underwater at 3,000 meters in depth with estimated recoverable volume at 2.7 trillion standard cubic feet. Nonetheless, oil and gas reserves at the Reed Bank are deemed to be larger than those in Malampaya.

Only last month, President Duterte sought the permission of Chinese President Xi Jinping to initiate a unilateral energy drill in Reed Bank, but to his counterpart’s dismay, the Filipino firebrand leader was threatened with war. The revived talks for joint development sprouted more than three decades ago when Chinese paramount leader Deng Xiaoping pitched the idea to the Philippines’ first female president Corazon Aquino. But the schizophrenic relationship turned sour when China started flexing its muscles using a historical claim to justify Beijing’s territorial expansion in the South China Sea cordoned by controversial dotted lines but nullified by the international arbitral court that sparked high-pressure flashpoints and protests among six other sovereign states which lay overlapping claims in the world’s busiest trade routes. As a defense mechanism, former Philippine President Benigno Aquino Jr. strategically countered China’s military projections by resorting to lawfare who deemed was best for the archipelagic country at that time to operationalize a territorial defense strategy.

China claims almost all the territories in the South China Sea including the Spartlys archipelago, a group of more than 750 reefs, islets, atolls, cays, and islands. The Philippines currently controls five islands, two reefs and two sandbars in the Spartlys. Consequently, unearthing what lies beneath the abundant resources in the contested maritime features, is inevitably viewed as ecologically and economically difficult affecting the still contentious maritime and territorial clash concerning the region’s security. 

According to the Philippine Department of Energy, the oil drill at Reed Bank may resume before the yearend. It was announced last July 12, coincidentally the same day when the Philippines noted the first year anniversary of Manila’s legal triumph against Beijing in the maritime row. It cannot be denied that hydrocarbon resources are becoming attractive and lucrative for both the Chinese and Filipinos given each state’s economic resurgence. China, already a major importer of fuels and minerals, rapidly gets equipped for such a competition; robed with highly-energy and resources-intensive economy, but the resource supply irregularities may be fatal as a result.

The growing geopolitical volatility in the region, especially in light of the Philippines’ pivot to China can be glanced at into both scientific and artistic forms of national security formulation.Veracity of the current security relationship between Manila and Beijing has been in opposing ends, however, with the renewed warming up relations and blossoming economic opportunities as evidenced by a possible joint oil exploration need to be scrutinized conscientiously, giving us a closer glance that recent affirmative episodes are determinants of the will of change to heal fragmented disparities in terms of national interests over sovereignty issues and territorial integrity.   

Furthermore maritime disputes are not the sum-total of the bilateral relations of claimant states of the islands, rocks, and cays in the South China Sea. Beyond diplomatic negotiations, there are mutual interests that must transcend beyond the issue. One side of the coin permeates a joint development that certainly translates into cooperation. Entertaining the iota of cooperation connotes a process of confidence building mechanism. Cooperation thus occurs when actors adjust their behaviour to the actual and anticipated preferences of others through a process of policy coordination. Policy adjustments may often be negotiated to synchronized group agreements with each actor’s preferences. Once individual and group policies become more compatible, a certain act of cooperation may be completed.