MANILA, Philippines (UPDATED) – The Philippines and China exchanged a memorandum of understanding (MOU) on oil and gas development in the West Philippine Sea on Tuesday, November 20, the first day of Chinese President Xi Jinping’s state visit.

The MOU is a type of deal that represents a lower level of commitment compared to a memorandum of agreement (MOA). 

The exchange of documents was done between Philippine Foreign Secretary Teodoro Locsin Jr and Chinese Foreign Minister Wang Yi in front of Xi and President Rodrigo Duterte.

During the signing, there were no details bared about the MOU apart from its title. But Energy Secretary Alfonso Cusi later on told reporters in a message that the deal covers the “West Philippine Sea/South China Sea.”

He said the MOU is an “exploration to find a solution” on how the Philippines can enjoy resources in the critical water body said to be rich in minerals and fossil fuel resources.

But China is claiming the West Philippine Sea even as the Philippines insists the sea is within its exclusive economic zone. The Permament Court of Arbitration ruled in favor of the Philippines when it declared in 2016 that China’s claim to the area is invalid.

The oil and gas development deal was one of 29 documents exchanged by Philippine and Chinese officials.

It’s not yet clear how different this MOU is from a planned framework agreement on joint exploration for oil and gas which Philippine officials had been preparing ahead of Xi’s visit.

Up to the last minute, officials could not say with certainty if the framework agreement would be signed during the visit.

Opposition senators had blasted the Duterte administration’s lack of transparency on the critical deal.

In one supposed version of the draft framework agreement publicized by Senator Antonio Trillanes IV, the Philippines and China agree that “the joint oil and gas exploration shall not affect” their respective positions “on sovereignty and maritime rights and interests.”

This means the two countries would not change their claims to the West Philippine Sea or stances with regards to the other nation’s claims. Thus, China does not recognize the Philippines’ rights over areas like Panatag (Scarborough) Shoal or the Spratlys Islands by signing the agreement.

The agreement does not mention specific geographic areas in the West Philippine Sea where joint exploration for oil and gas will be conducted. 

Controversy surrounding oil development

Any moves by the Duterte administration in support of joint exploration with China in the West Philippine Sea has been loudly challenged by some lawmakers and legal minds.

Acting Supreme Court Chief Justice Antonio Carpio, for instance, has warned that any joint exploration in areas being claimed by China would be a violation of the constitutional provision that marine wealth found in the Philippines’ exclusive economic zone must be reserved for the use of Filipinos only.

A previous joint exploration deal between China, the Philippines, and Vietnam is being challenged in the Supreme Court.

Lawmakers had challenged the constitutionality of the 2005 Joint Marine Seismic Undertaking.

Approved under the Arroyo government, the JMSU is an agreement among China, Vietnam, and the Philippines through their oil companies to jointly conduct research of petroleum resource material offshore. The offshore exploration covers both disputed and undisputed territories.

The petitioners, Left-leaning lawmakers at the time when they filed the petition, allege that the JMSU violates the Constitution for not being able to follow a provision limiting who can partner with the government in exploring the country’s natural resources.

The following are the companies involved in the JMSU: the Philippine National Oil Company (PNOC), the China National Offshore Oil Co (CNOC), and the Vietnam Oil and Gas Corp (PetroVietnam).

The 1987 Constitution states that only Filipino citizens or corporations and associations with at least 60% ownership of Filipino citizens can enter into agreements to jointly develop natural resources.

Section 2, Article XII reads: “The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporation or association at least sixty per centum of whose capital is owned by such citizens.” – Rappler.com