Getting ahead in WPS

How do we smartly get ahead of the Supreme Court’s recent ruling on what constitutionally can and cannot be done when exploiting potential energy resources in the West Philippine Sea?

For starters, we can dispense with the lie the SC ruling isn’t in our best economic interest. The ruling actually is in our economic interest, especially in our urgent quest for foreign investments when exploiting our seabed energy resources like oil and gas in the tension-filled sea.

Before that, a briefer on last week’s historic ruling hardly piqued the public’s interest.

TheHighTribunalflatlydeclared as unconstitutional a controversial 2005 agreement among Philippine, Vietnamese and Chinese oil firms to explore for oil in over 142,000 square kilometers of the South China Sea.

Specifically, the High Tribunal voided the Joint Marine Seismic Undertaking among China National Offshore

Oil Corporation, Vietnam Oil and Gas Corporation, and the Philippine National Oil Company. The agreement lapsed on 30 June 2008.

Politically, at first glance, the ruling reaffirms the nationalist argument the country’s “patrimony and sovereignty in the exploration, development, and utilization of our natural resources” remain sacrosanct.

As a result, the ruling, as retired SC senior associate justice Antonio Carpio justifiably argues, upholds the only four constitutional means by which the country can execute exploration, development, and utilization with other states, especially China.

The four constitutional means are direct undertaking, co-production, joint venture, and production-sharing agreements.

Direct undertaking, wherein the Philippines has direct control and supervision, is the only constitutional mechanism where foreign companies can participate via a “service contract,” argues Carpio.

As for the others, only companies that are 60 percent Filipino-owned can legally do so.

Many, however, chafe under these constitutional restrictions, arguing they effectively tie our hands when dealing with foreign investors in our quest for our own oil resource. But do they really?

Yes, if we only see the restrictions through parochial political lenses, particularly about how we are enticing Chinese investments.

No, if only we open our eyes wider, enabling us to see there are presently at play larger economic issues other than political issues in the disputed seas.

In such a policy rethink, South China Sea expert Gregory B. Poling insists that we do away with the fixation that the hunt for energy resources is the prime driver of disputes in the contested seas. It is not.

Mr. Poling in a recent book persuasively argues that present circumstances dictating the energy hunt dramatically changed now that all claimants, including China, have realized “there is no commercially viable oil and gas” around the disputed seas.

This, despite a 2012 estimate there might be 12 billion barrels of undiscovered oil beneath the South China Sea.

Nonetheless, Mr. Poling says the only exploitable energy resources, for now, are the natural gas basins situated along the coasts of countries involved in disputes and on a handful of underwater features like Vanguard Bank and Reed Bank, which is near the country’s Malampaya Gas fields.

In turn, that means the only commercially viable way to extract the gas is to transport it by pipeline for use or processing on shore.

A practical fact that restricts China. Despite its economic might, China would need to lay an undersea pipeline across nearly 1,000 miles of difficult geography and contested waters to access gas in the southern portion of the South China Sea.

“So the only viable use of most natural gas in the

South China Sea is for electricity generation by the nearest coastal state. Gas from

Reed Bank is no good to anyone outside the Philippines; Vanguard Bank’s gas can help only Vietnam,” says

Poling.

As such, arguing along these compelling practical facts ably aids us in smartly maneuvering away from lopsided dealings with recalcitrant Chinese or foreign investors regarding any constitutional exploitation of our own energy resources in the WPS.

“South China Sea expert Gregory B. Poling insists that we do away with the fixation that the hunt for energy resources is the prime driver of disputes in the contested seas.

“If only we open our eyes wider, enabling us to see there are presently at play larger economic issues other than political issues in the disputed seas.