The suspension of oil exploration activities in the West Philippine Sea, despite the country being armed with an arbitral award—the 2016 ruling by the Permanent Court of Arbitration (PCA) that favored the Philippines over China’s claims in the oil-rich West Philippine Sea (South China Sea) — is yet another proof of how the Duterte administration has bowed to the continued bullying from China, which has been known to intimidate South China Sea claimants conducting energy exploration activities to pressure them into accepting joint development deals.
As maritime expert Jay Batongbacal, the director of the University of the Philippines Institute for Maritime Affairs and the Law of the Sea, told the Inquirer last week, the government’s decision “again demonstrates Mr. Duterte’s submission to China’s demands, and that previous statements against China’s actions were only for show.” He said it is also a signal that China is seriously out to prevent any petroleum exploration and development by the Philippines within its own waters. Retired Supreme Court justice Antonio Carpio, a West Philippine Sea expert, agreed that Mr. Duterte was only allowing himself “to be bullied by China.”
It was the Department of Energy (DOE) that ordered last April 6 the suspension of oil and gas exploration in Philippine waters off Palawan. The DOE’s order came a month after President Duterte said in a public address that the country must abide by a supposed joint exploration agreement with China to avoid conflict. The President disclosed that someone “from China” had reminded him of this after learning that Philippine companies planned exploration activities in the two areas.
The DOE order effectively stopped all exploration activities in Service Contracts 72 and 75 — two sites in offshore Palawan earlier identified by the government as possible areas of joint energy exploration with Beijing — pending a go-ahead from the Security, Justice and Peace Coordinating Cluster (SJPCC) of the Cabinet. As a result, PXP Energy Corp. and its subsidiary Forum Energy Ltd.—hired by the government to conduct exploration activities—had to declare a force majeure, saying the order prevented them from “performing their obligations.”
The SJPCC had cited “the political, diplomatic and national security implications of any activity in the West Philippine Sea” for its inaction on the request to allow exploration activities in the area and it is now unclear whether the suspension would be lifted anytime soon. Defense Secretary and SJPCC chair Delfin Lorenzana declined to comment and referred the Inquirer to the DOE.
Energy Secretary Alfonso Cusi, on the other hand, said the DOE has appealed to the SJPCC to allow the resumption of oil and gas exploration in the West Philippine Sea. The DOE sought reconsideration on the ground that under international law, geophysical survey is perfectly legitimate activity in any disputed area.
What is really unfortunate is that other countries do not seem to fear China’s bullying. As Carpio told the Inquirer, “Malaysia completed its drilling and Indonesia also completed its survey (in disputed areas) despite threats from China.”
Batongbacal has warned that PXP might be forced to abandon its service contract with the government that started in 2010 given recent developments.
“PXP will have to decide whether the investment is worth holding on to or not. If PXP gives up on the contract, it will lose shareholder value in the stock market, which means it’s a loss of investments. Other petroleum companies will see that and may be discouraged from investing in future Philippine petroleum exploration,” he explained.
The Philippines, without new indigenous sources of petroleum, would also have to rely on imported liquefied natural gas to sustain power plants being supplied by the depleting Malampaya gas field, and “this could lead to increasing energy prices because it would be more susceptible to fluctuations in the global energy market, and natural gas is in very high demand now,” he said.
In an exchange of text messages with the Inquirer, Cusi said he wrote the SJPCC “to support the resumption of exploration,” contending that such a survey was “perfectly legitimate” even in a disputed area under international law. “As part of the whole of government approach, the DOE asked the SJPCC to reconsider the decision and to allow the survey at the soonest possible time. The DOE is still waiting for the decision on its requests for reconsideration,” Cusi told the Inquirer.
The government must quickly lift the suspension of oil exploration in an area that is clearly within the country’s exclusive economic zone. Other countries being bullied by China have done it. There is no valid reason why the Philippines should not do the same. The Philippines cannot forever be afraid of even the slightest provocation from China. The country’s energy security is at stake and the world is behind us against China’s absurd territorial claims on the West Philippine Sea. Now is the time to stand up to China’s bullying.