An ominous warning

"What was our ship doing in the area anyway?"


The Reed or Recto Bank in that area of South China Sea is a table mount off the coast of Palawan but within the country’s exclusive economic zone. The area covers about 8,866 kilometers and is mostly submerged. Lately, the shallow body of water has drawn much attention, and the basis for which the Philippines, China, Vietnam and Taiwan have intensified their claim is not about sovereignty. Rather, it is the discovery by the US Geological Survey indicating that the territory contains significant deposits of undiscovered hydrocarbon. The USGS assessment estimates that anywhere between 0.8 and 5.4 (means 2.5) billion barrels of oil and between 7.6 and 55.1 (mean 25.5) trillion cubic feet (tcf) of natural gas lies underneath the area. The whole of South China Sea is estimated to contain approximately 11 billion barrels of oil and 190 tcf of natural gas.

If one may recall, in November 2018, President Duterte and China’s President Xi Jinping witnessed the signing of a memorandum of understanding by the country’s secretary of foreign affairs Teddy Locsin and China’s foreign minister Wang Yi. The draft of the agreement was obtained and released by opposition Senator Antonio Trillanes IV stating in broad terms that “the joint exploration in the West Philippine Sea would be in accordance with the principles of “mutual respect, fairness and mutual benefit, flexibility, pragmatism and consensus.”

Since under the law of the sea, no sovereignty can be imposed by any state over a body of water, both the Philippine and China enjoy their natural advantage over the area. The Reed Bank is situated within the country’s exclusive economic zone, but outside the demarcated line in the Treaty of Paris signed between Spain and the US on Dec. 10, 1898. The demarcation became the map of the Philippine archipelago to date, except that it was amended in the 1973 Constitution when Sabah was included as part of the archipelago by “historic right and legal title” as basis for our claim. China’s right over the area is based on what it claims as the “nine-dash line” and was somewhat reinforced for the fact that the line is outside the demarcation in the Paris Treaty.

The problem is that before the Philippines signed that MOU with China, the Department of Energy has been issuing service contracts to the state-owned PNOC and to several foreign firms engaged in the exploration and exploitation of oil and gas in the area but mostly within the country’s EEZ. The DOE issued service contract 72 granting PXP Energy Corporation, which is controlled by Manuel V. Pangilinan, to explore oil and gas within the same area of the Reed or Recto Bank. For inexplicable reasons, the DOE also issued Service Contract 57 in favor of PNOC. According to Malacañang, Service Contract 57 covers northwest of Palawan while service contract 72 refers to the Reed Bank proper. SC 57 is located accordingly in a non-contested area while Reed Bank is disputed which requires an agreement from other parties for the deal to materialize.

Unexpectedly, the DOE issued a stop order calling it “force majeure” for Service Contract 72 in 2014. Many believe PNOC wants to enter into partnership for service contract 57 with China’s CNOOC. Such exploration activity in the area could spell disaster to PXP Energy Corp. One must consider that the MOU we signed with China has reference to Section 2, Article XII of the Constitution. China is amenable to the 60-40 provision which is in our favor.

But would that proposition hold through with PXP Energy Corporation, a private firm, if it demand sharing with PNOC similar to CNOOC and based on the Section 2, Article XII of the Constitution? Remember, PXP Energy has a 77.5 percent controlling stake, which in turn has a 70 percent interest, in SC 72.

We can only speculate that CNOOC’s joint venture with PNOC will not serve the interest of private firms like what the past administration of Gloria Macapagal Arroyo did to allocate 90 percent of the shares of Malampaya natural gas project to Shell Corp., Chevron-Texaco and lately to the Lopez-owned EDC. PNOC in the end was given a paltry share of less than 5 percent just to keep the tab open for capitalization in gross violation of the Constitution they themselves amended. This also clarifies why Service Contract 72 was halted for fear that China might be giving a greater share that will only end up in the hands of private firms. Some even suspect that former foreign affairs secretary Albert Del Rosario has stakes in PXP Energy Corporation, and this is why the project has been sailing through rough waters.

The incident such as the ramming of the Philippine vessel is an ominous sign that the country’s joint venture agreement with China for oil and gas exploration may not be in for a good start. Nobody could say it was intentionally rammed or that it was even a Chinese vessel that rammed our ship. What surprises many is that US media, Rappler, ABS-CBN, GMA-7, local CNN, and their local political analyst on the South China Sea, Jay Batongbacal, were all quick to conclude it was a Chinese vessel that rammed our ship as if they were on board ship it happened. Moreover, there are many questions why the ship was anchored in that area in the wee hours of the night.

Most silly is the statement made by defense Secretary Delfin Lorenzana blaming China for the incident. To quote he said, “We condemn in the strongest terms the cowardly action of the Chinese fishing vessel and its crew for abandoning the Filipino crew. This is not the expected action from a responsible and friendly people.” Many are wondering how Lorenzana managed to identify the vessel Chinese or much more classify it as fishing boat when the crew members admitted the incident occurred in the darkness of night. After realizing there was serious flaws in his knee-jerk reaction, he suddenly retracted claiming he was unsure it was a Chinese vessel that rammed our ship.

For want of evidence identifying the vessel that rammed our ship, the good question is, what was our ship doing in that area? It cannot be said it was fishing because the crew admitted it was on anchor. Could it be said there was provocation that prompted the other to ram our vessel? I am asking because there has been an incident before where our fishing boats harassed Chinese coast guard vessels forcing them to use water cannons to disperse the Filipino bancas.

The demand for harsh and drastic response as what opposition Senator Risa Hontiveros described as “despicable and inhumane” is exactly what they want, which is to militarize the area to put to a naught the agreement. In which case, the US should congratulate its proxy for stalling China’s move to expand our oil and gas exploration in the South China Sea.

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Topics: Recto Bank , South China Sea , Rodrigo Duterte , Xi Jinping , Teddy Locsin
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