Win-win solution to SCS tensions

IS IT possible at all to arrive at a mutually acceptable ‘arrangement’ or perhaps even just a ‘temporary solution’ to the contentious territorial and maritime claims in the South China Sea between the Philippines and China?

We’re talking about a modus vivendi – a working arrangement or a practical compromise – that would alleviate the prevailing tensions in the vital sealane between the two countries?

For this, we turn to two experts and a business mogul whose company could benefit from joint development of oil and gas resources in the SCS.

Former Chief Justice Artemio V. Panganiban, in a recent column in another broadsheet, shows a path to a win-win solution.

Panganiban noted that while the July 2016 Arbitral Award recognized our sovereign rights to explore, develop, and utilize the oil, gas, and other resources buried under our Exclusive Economic Zone, China rejects it and insists that almost the entire South China Sea, including our EEZ, belongs to it by historic title.

He clarified, however, that the Arbitral Award did not grant the Philippines (and we did not claim) sovereignty or ownership over the land areas in the SCS and their territorial seas.

The bright side of this, the retired jurist now says, is that China has agreed to undertake “joint development” of the resources in our EEZ.

In light of this, he suggests that a memorandum of understanding to reconcile and satisfy the seemingly intractable legal positions of China and the Philippines must first be concluded on a government-to-government basis.

Then, private concessionaires, local and foreign, can be contracted to set the financial, technical, and management parameters of how to explore, develop and utilize the resources.

Here’s what he said: “To extract and enjoy our maritime wealth, the help and cooperation of China is very important, nay, indispensable. It is still the most ubiquitous superpower in our area, despite the occasional freedom of navigation sailings of the US and its allies.

“In short, China has effective military control over the SCS. No private concessionaire will dare invest billions of dollars and operate in the SCS without China’s assurance of ‘no interference’ and ‘no swarming’.”

The former jurist argued: “Given China’s past willingness to assist and cooperate, I believe we should resume the past initiatives to finally forge an MOU with China to enable us to harness private concessionaires to extract these resources.”

From another direction, but along the same line of thinking, Mark J. Valencia (a maritime policy analyst in Hawaii) and William T. Onorato (a former legal adviser on energy to the World Bank), also weigh in on how China and the Philippines can settle their South China Sea resource dispute and avoid conflict.

In a recent article, they said that with the Marcos Jr. administration reported to be considering allowing Forum Energy to proceed with petroleum exploration on the Reed Bank, it is likely that the company would ask the government for protection against harassment by China.

If provided, it could lead to a military confrontation and that could draw in the Philippines’ military ally, the United States.

A way to avoid such a confrontation, they suggest, is through negotiating a provisional cooperative arrangement of a practical nature that satisfies both parties.

There are compelling reasons to do so, they said. The Philippines’ main domestic supply of gas for electricity, the Malampaya gas field, will soon run out, and must therefore be replaced.

But it is constrained from proceeding unilaterally on exploration activities on Reed Bank amid China’s stern objections.

On the other hand, China also wants to sign a cooperative agreement because it would help strengthen its relations with the Philippines and this would serve as a precedent for the temporary settlement of its disputes with other claimantcountries in the South China Sea.

With Marcos Jr. set to visit China in early January, this will offer an excellent opportunity to discuss matters of principle and to iron out details on how to proceed despite constitutional and legal constraints.

Business magnate Manuel V. Pangilinan also sees President Marcos’ trip to China as a ‘good’ opportunity for both countries to discuss issues about oil and gas exploration in the West Philippine Sea.

Pangilinan heads PXP Energy Corp., which holds interest in two petroleum exploration service contracts in the West Philippine Sea.

PXP Energy has indicated readiness to resume activities in Service Contract 75 and SC 72 if allowed to do so.

But Pangilinan wants the Philippine government’s green light to do so: “The assets are owned by the state. We’re merely concessionaires.”

PXP and Forum Energy have been told by the Department of Energy to “put on hold all exploration activities for SC 75 and SC 72 until such time that the Security, Justice and Peace Coordinating Cluster has issued the necessary clearance to proceed.”

Is a win-win solution leading to joint development of oil and gas resources by the Philippines and China in the offing?

At the very least, the Marcos meeting with Chinese President Xi Jinping could open up a new round of discussion on how to resolve the thorny SCS issue.

But whether they can agree to work together is still up in the air—and could depend on how much each could benefit from what lies in the bottom of the sea.

Is a win-win solution leading to joint development of oil and gas resources by the Philippines and China in the offing?