Philippines urged to seek exploration partners from US, India to deter harassment from China

By John Victor D. Ordoñez, Reporter

THE PHILIPPINES should seek out South China Sea energy exploration partners from regional or global powers like India or the US, according to maritime analysts. 

“Working with large companies from important countries who might be harder for China to harass is one tactic that’s been used before,” Raymond M. Powell, a fellow at Stanford University’s Gordian Knot Center for National Security Innovation, told BusinessWorld in a message on X, formerly Twitter. 

“Previously, US company ExxonMobil had an oil contract off Vietnam’s coast, and its size and US ties made it also harder to bully,” he added.

The Philippines is under pressure to find other  sources of indigenous energy as its Malampaya gas field, which supplies a fifth of the country’s power requirements, nears depletion. PXP Energy Corp.’s exploration work at Reed Bank, another potential source of gas in disputed waters, remains suspended due to tensions with China.

Last month, the US and India promised to boost maritime security ties with the Philippines with China continuing to aggressively assert its territorial claims.

China has said, any plan for resource exploitation in the South China Sea should not involve countries outside the region.

Philippine Ambassador to the US Jose Manuel D. Romualdez has said Manila is “working closely with our allies, not only the US but also Japan and Australia” to exploit the resources available to it in the South China Sea.

The main venue for China-Philippines confrontation remains the BRP Sierra Madre outpost at Second Thomas Shoal. The Chinese Coast Guard routinely attempts to obstruct Philippine resupply missions to the grounded ship.

The Malampaya gas field is the country’s only indigenous commercial source of natural gas. It is expected to run out of easily recoverable gas using current techniques by 2027.

President Ferdinand R. Marcos, Jr. extended Malampaya Service Contract 38 to February 2039, allowing operators to exploit the field beyond the initial Feb. 22, 2024 expiration date.

Lucio B. Pitlo III, a research fellow at the Asia-Pacific Pathways to Progress Foundation, said many prominent multinational oil companies are still reluctant to do gas work in the South China Sea due to the political and security risk. 

“However, there may be opportunities for collaboration in less fraught areas, like tapping renewable energy (RE) through floating solar or offshore wind farms and wave energy,” he said via Messenger chat.

He also noted that ”Chinese capital, technology, and experience in this field can benefit the Philippines.”

On the other hand, Infrawatch PH convenor and public investment analyst Terry L. Ridon said the government must ensure it does not conduct exploration activities in areas of the sea with  overlapping claims.

“For areas with overlapping claims, it is unwise to undertake exploration as it will only raise tensions in disputed waters,” he said via Messenger chat.

The government aims to increase the share of RE in the power generation mix to 35% by 2030 and to 50% by 2040. Renewables currently account for 22% of the Philippine energy mix.

In January last year, the Philippine Supreme Court voided a 2005 government deal with China and Vietnam for joint gas and oil exploration.

It said the agreement violated the constitution for allowing foreigners to explore for natural resources in 142,886 square kilometers of Philippine territory without full supervision from the Philippine government.

Mr. Pitlo said the ruling may complicate Manila’s oil partnerships in the South China Sea.

Legislators have been pushing for measures seeking to ease the process of importing liquefied natural gas (LNG) amid the dwindling reserves of the Malampaya field.

Senator and chairman of the Ways and Means Committee Sherwin T. Gatchalian said last year that LNG will set the stage for the transition to RE.

China claims more than 80% of the South China Sea, which is believed to contain substantial oil and gas deposits and through which billions of dollars in trade passes each year.

A United Nations-backed arbitration court in July 2016 voided China’s claims, which were based on a 1940s map.

China has ignored the ruling, which has failed to stop its island-building activities in areas also claimed by the Philippines, Vietnam, Brunei, Malaysia, and Taiwan.

“Since the Philippines has the sovereign rights to explore and exploit natural resources including gas exploration in its exclusive economic zone (in the South China Sea), Manila has the prerogative to collaborate with foreign actors,” Chester B. Cabalza, founding president of Manila-based International Development and Security Cooperation, said via Messenger chat.