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Energy chief thinks China won't interfere in West PH Sea oil activities done under PH laws

Philippine Energy Secretary Alfonso Cusi believed China would respect any oil and gas exploration in the West Philippine Sea pursued under Philippine laws, despite Beijing's illegal claim to these waters.

"I cannot speak on behalf of China, but I am saying, based on the pronouncement made by the foreign secretary that the place is an 'oasis of peace' then it follows that we can do our activity freely as the country that has the economic rights," said Cusi on Friday, October 16, during a virtual press briefing.

"I'm sure China naman will respect our decision," he later on added, saying he was sure holders of Philippine service contracts can pursue their activities in the West Philippine Sea "safely."

It was China's foreign ministry spokesman Hua Chunying who said Beijing wanted Southeast Asia to be an "oasis of peace and a promising land of development."

She said this during Philippine Foreign Secretary Teodoro Locsin Jr's official visit to Yunnan, China from October 9 to 11, upon the invitation of Chinese Foreign Minister Wang Yi.

On Thursday, Philippine President Rodrigo Duterte lifted the ban on West Philippine Sea oil exploration and development, allowing companies that held service contracts to resume activities in those areas.

These service contracts were issued by the Philippine government. Thus, any activities pursued on the basis of these contracts are done under Philippine laws and supervision.

"They are governed by the service contract that we have issued and those are under the Philippine laws, so it's the Philippine laws that would govern that," said Cusi.

Beijing, however, claims the West Philippine Sea by virtue of the controversial 9-dash line and, thus sees all activities here subject to Chinese laws.

In 2016, the Permanent Court of Arbitration struck down the 9-dash line as invalid and affirmed the Philippines' rights over the West Philippine Sea as it belongs to Manila's Exclusive Economic Zone.

Former foreign secretary Albert del Rosario called Duterte's decision to lift the moratorium a "constructive move."

"For as long as we pursue activities with China that is in accordance with Philippine law, this would be a step in the right direction towards a peaceful settlement of disputes," he said on Friday.

China's opportunity: Joint development deal

However, Duterte's lifting of the ban also helps the joint oil development agreement signed by China and the Philippines under his presidency.

Cusi said the move now allows petroleum activities to be pursued by a Philippine company and a counterpart from China, as long as the Philippine entity that holds a service contract.

This means that the Chinese firm will be operating under Philippine laws as it conducts oil activities in the West Philippine Sea.

So far, Philippine company Forum Energy Plc, which holds Service Contract No 72 covering Recto Bank, is looking to partner with state-run China National Offshore Oil Corporation (CNOOC). This arrangement has not been finalized.

Forum Energy Plc is controlled by Philippine corporations PXP Energy, Apex Mining, and Atok Big-Wedge, which are led by Filipino tycoons Manny V Pangilinan, Enrique Razon, and Roberto Ongpin, respectively. (READ: Oil stocks surge as Duterte allows West PH Sea exploration)

Billionaire and Duterte friend Dennis Uy is Atok Big-Wedge's vice chairman, after he bought 100 million shares in July 2019. 

Recto Bank contains the Sampaguita gas field, said to be the "next Malampaya." (READ: Reed Bank 'holds huge oil, gas reserves')

Other holders of service contracts covering West Philippine Sea areas were state-run Philippine National Oil Company-Exploration Corporation (holder of SC 59 covering 1.5 million hectares in West Balabac, southwest of Palawan) and Pangilinan's PXP Energy Corp (holder of SC 75 covering 616,000 hectares northwest of Palawan).

It was not yet clear if these corporations plan on partnering with foreign firms, or specifically Chinese state-run firms, to conduct their oil and gas activities. – Rappler.com

Pia Ranada

Pia Ranada covers the Office of the President and Bangsamoro regional issues for Rappler. While helping out with desk duties, she also watches the environment sector and the local government of Quezon City. For tips or story suggestions, you can reach her at pia.ranada@rappler.com.

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