TWO Cabinet secretaries and the chairman of the Senate energy committee are convinced that lifting the five-year moratorium on oil exploration in the Western Philippine Sea will step up efforts to secure new sources of oil and gas, among critics who fear that this would give China the upper hand in the negotiations.
Secretary of State Teodoro Locsin Jr. called for a response to President Duterte’s late-Thursday order lifting the suspension of oil activities at the WPS, extinguishing fears of Chinese control over any activity, noting two things:
one, the establishment allows participation by any country and company in joint activities with the Philippines; two, the existence of a Joint Memorandum of Understanding (MOU) with Beijing is designed in such a way as to protect the interest of the Philippines at every step.
That has been my insistence. The lifting of the moratorium is a welcome development because it is the latest hurdle to the current development under the MOU on Oil and Gas, Locsin wrote on Twitter in response to a question from BusinessMirror.
He said he had previously opposed a suggestion that he would lift the moratorium only on projects with Chinese companies. I hit it off as an admission that China decides which projects are acceptable in the disputed waters, acknowledging that China has the final say.
But with the order issued last week, he [Duterte] has rightly come up with a universal uplift, Locsin said.
He revealed that he had previously offered the same Memorandum of Understanding in the US, but an American energy undersecretary in a face-to-face meeting with me, said the estimated reserves are too small to deserve serious bids from major companies. oil in the US and that we should try small ones in Texas. But she stressed that the Memorandum of Understanding had been created and fully protected the sovereign rights of the Philippines.
Duterte signed the Memorandum of Understanding on joint exploration with China during Chinese President Xi Jinpings 2018 visit to the Philippines, considered a high point in the country’s relations with Beijing.
Former President Benigno Aquino III initiated the ban after his government took China to arbitration tribunal for violations in the Western Philippine Sea, which is said to be rich in oil and gas but is part of the Philippiness Exclusive Economic Zone. The policy meant that service contracts for the development of oil resources in the Western Philippine Sea could not be pursued by the corporations that won them.
Gatchalian, Cusi optimistic
Duterte critics, including ousted Senator Leila de Lima and Senator Risa Hontiveros, warned over the weekend that the order to lift the oil exploration moratorium on the WPS strengthens China’s hand given the existing memorandum of understanding between Manila and Beijing.
But Sen. Sherwin Gatchalian, chairman of the Senate Energy Committee, thinks good bilateral relations with Beijing rule out the possibility of recent unjust interventions in oil and gas drilling in the area.
Invited to DWIZ on Saturday, Senator Gatchalian reiterated his initial reaction when Energy Secretary Alfonso Cusi announced late Thursday that the Presidents were ordering the lifting of the moratorium.
Given the shrinking supply from the Malampaya gas field, which accounts for 20 per cent of the country’s electricity supply and almost 30 per cent in Luzon, Gatchalian sees the reopening of the oil and gas exploration gate in the Western Philippine Sea being more in time.
This will help provide the country with enough energy if there are potential resources within the exclusive economic zones. [EEZ] which could provide our power supply in the coming years, the senator had said after Cusi made the announcement.
With the moratorium lifted, Gatchalian expects blocked exploration and evaluation activities in Service Contracts 59, 72 and 75 may now resume, and these could be new oil and gas resources they can provide, if they do not contribute to stabilization of the country’s energy supply. This, he added, could also open up the area for prospective investors under the Philippine Conventional Energy Program which was created primarily to attract investors to explore local energy sources.
Prior to the moratorium, Pangilinan-led PXP Energy was in state-owned negotiations with China National Offshore Oil Corp. (CNOOC), but several other players have expressed interest in the area as well.
Critics insisted, however, that the lifting of the moratorium was only intended to favor China, noting Duterte’s soft stance towards the Asian giant.
In his DWIZ radio interview, Gatchalian noted that while 99 percent of the oil supply to the Philippines is imported, there is an urgency in developing local resources.
The DOE has marked a decline in the Malampaya gas field in Palawan, with supplies expected to be completed in a few years.
In announcing the lifting of the moratorium Thursday, Cusi said a Job Restart notice was issued by the DOE to Service Contractors doing oil-related activities in SC 59, 72 and 75 areas in the Western Philippine Sea. Activities there were suspended in the Force Majeure on the ground due to the WPS dispute. SCs 59 and 72 are operated by the Philippine National Oil Co.-Exploration Corp. (PNOC-EC) and Forum Ltd., respectively. Meanwhile, PXP Energy Corp. operates with SC 75.
Lifting the suspension will fill the economy with fresh foreign direct investment and generate high-skilled jobs, both of which are needed to boost the economic recovery amid the Covid-19 pandemic, Cusi said.
The lifting of the suspension puts utility contractors under the legal obligation to invest capital in contract areas and hire Filipino engineers and technicians to resume research, he said.
From Lima: China favored
In the view of Senator de Lima, the rise favors only Beijing. When Duterte told the UN that the Hague decision was beyond compromise, he must have thought: unless China says otherwise.
Because here he is now taking a step closer to realizing his joint exploration agreement with his BFF [best friend forever], de Lima said in a statement Sunday. This is Duterte’s legacy: squeeze the country’s wealth and interest to make it a paradise for China to serve, de Lima added, in the Philippines.
Risa: China must consider the decision
Senator Hontiveros is cautiously optimistic. Despite the welcome development, the senator asserted that joint oil exploration should begin only after China accepts and adheres to the 2016 decision of the Permanent Court of Arbitration, recognizing Philippiness sovereign exclusive rights over its EES in the WPS .
Until China recognizes our victory in the Hague decision, no negotiations on joint exploration will be productive. We must continue to assert that only the Philippines can undertake research in our EEC. The requirements of the Constitution must be met and our sovereign ownership of the resources on our continental shelf must be recognized. Oil and gas reserves are abundant in the Western Philippine Sea, so they want to get it, the senator said.
Hontiveros noted some estimates that WPS contains up to 130 billion barrels of oil, which experts say follows Saudi Arabia in terms of oil reserves. Retired Senior Justice Antonio Carpio also said in his e-book The South China Sea Dispute that WPS could be rich in methanol, a biofuel that could fuel China’s economy for 130 years.
Hontiveros said, We should not allow China easy access to our seas, not only because of its rejection of the 2016 decision but also because we need to save the money and resources that can lead us through this pandemic. Let us give priority to our well-being, the senator said.
Meanwhile, Locsin said he had warned of an early revelation of the removal to prevent domestic trade. I warned against any premature disclosure of enterprises proposed to be protected from domestic trade. Why not talk about the ongoing MOU negotiations. The warning extends to any announcement of alleged progress in negotiations, including development as a way to raise stock prices and sell.
The quarterly lawmaker said the joint research is covered by the Memorandum of Understanding on Oil and Gas Development I drafted, which does not sacrifice a point of our sovereign rights when the area is in disputed waters.
DFA [Department of Foreign Affairs] will continue to implement the Memorandum of Understanding to ensure that all projects follow a model that protects our sovereign rights and will denounce as a sale any project that falls short of the very strict requirements of the DFAs, Locsin added.
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