By Erika Mae P. Sinaking, Reporter
A POSSIBLE joint oil and gas exploration with China could improve the Philippines’ long-term energy security, but any effect on fuel prices is likely to take years, analysts said.
“If oil exploration proceeds, we’ll have our own source of oil and thus will cut down on oil imports and thus lower pump prices,” Edmund S. Tayao, president and chief executive officer of Political Economic Elemental Researchers and Strategists, told BusinessWorld via Facebook Messenger. “There’s a caveat though in doing it with China.”
President Ferdinand R. Marcos, Jr. last week said there was a “distinct possibility” that the Philippines and China could proceed with joint exploration in the South China Sea, although he could not provide a timeline for an agreement.
The talks are focused on the terms of reference for a possible arrangement, Mr. Marcos said, as the Philippines seeks additional energy sources after global supply disruptions pushed up fuel prices.
Mr. Tayao said he was uncertain whether the latest talks would progress differently from earlier attempts. Negotiations could move faster if Manila and Beijing agree to keep sovereignty issues outside the proposed commercial arrangement, he said.
Chester B. Cabalza, president and founder of International Development and Security Cooperation, said any cooperation would not immediately translate into cheaper fuel because global oil prices remain vulnerable to geopolitical shocks.
“The joint exploration between Beijing and Manila isn’t new to us,” he said via Facebook Messenger. “Its fragility comes from the unstable strategic partnership of the two neighbors.”
“The possibility is to be seen. But there’s no guarantee that this will lower fuel prices in the Philippines,” he added.
PREVIOUS ATTEMPTS STALLEDJoint exploration with China has been attempted before. Manila and Beijing signed a memorandum of understanding on oil and gas development in 2018 that called for negotiations on arrangements for exploration and exploitation in relevant maritime areas.
The Supreme Court in 2023 declared unconstitutional a 2005 Joint Marine Seismic Undertaking involving Philippine, Chinese and Vietnamese state-owned oil companies.
The court said the agreement allowed wholly owned foreign corporations to participate in the exploration of Philippine natural resources without complying with constitutional safeguards.
Mr. Tayao said previous attempts at cooperation encountered sovereignty issues. Any new arrangement should be strictly commercial and should not involve questions of ownership or sovereignty, he said.
“If it pushes through this time, it can only be purely business and doesn’t touch on ownership or sovereignty,” Mr. Tayao said.
Mr. Cabalza said the project could remain unresolved beyond Mr. Marcos’ term. The President could at most establish the groundwork for future bilateral negotiations on exploration at the Reed Bank, he said.
“The project will be indefinite,” he said. “Even by the time he steps down from office, it may not even materialize.”
The Philippines declared a state of national energy emergency in March after the Iran war disrupted global oil markets. The country remains heavily dependent on imported energy.
Mr. Tayao said Manila should avoid relying on a single project or partner for energy security.
“When dealing with China, we should learn from many countries in Africa and even Italy that eventually withdrew from its agreement with China,” he said, adding that the Philippines “should explore options with other countries.”
Mr. Cabalza said relying on a single joint exploration arrangement with China could create an imbalance because of Beijing’s economic and military strength.
“China wants a bilateral trade and security negotiations on joint exploration,” he said. “In our experience, a single joint exploration is asymmetrical given China’s economic clout and defense posture in the contested sea.”
The Philippines has traditionally used “minilateral and multilateral” approaches in defense and economics, Mr. Cabalza said, suggesting that energy cooperation should also be diversified.
The government has pursued domestic exploration separately from the proposed China arrangement. The Department of Energy said in January that a significant natural gas discovery at Malampaya East 1, estimated at about 98 billion cubic feet of gas in place, could boost long-term energy security.
The government is also developing the fourth phase of the Malampaya project, with officials saying additional reserves could support domestic gas supply through 2034.