Page 4 - AsianOil Week 03 2023

AsianOil COMMENTARY AsianOil

Philippines Supreme Court rules

2005 agreement with China for

joint offshore exploration illegal

There are mixed readings of what the ruling could mean for offshore

development in the disputed area.

CHINA A ruling was made earlier this month by the exploration, but nothing materialised and the
Philippines’ Supreme Court that an agreement deal was dropped in June last year before Duterte
WHAT: made between the Philippines, China and Viet- left office due to constitutional constraints. The
The Philippines’ supreme nam in 2005 on the joint exploration of parts of country’s foreign ministry later said the MoU
court has said an the South China Sea is illegal on the grounds that had been terminated completely and that noth-
agreement with China it is in contradiction to the country’s constitu- ing was pending.
and Vietnam in 2005 on tion, which stipulates that the Philippine state The sovereignty issue forced Manila to take
joint exploration in the must control and supervise any exploitation of the matter to the Permanent Court of Arbitra-
South China Sea is illegal. natural resources in its territory. tion in The Hague in 2016, where the court ruled
The ruling comes some 14 years after a in the Philippines’ favour and invalidated China’s
WHY: petition protesting against the agreement was claim to a large part of the Philippine EEZ. But
The court ruled that the presented to the Supreme Court in 2008 by that has done little to change China’s position
agreement contradicted Philippines lawmakers and follows years of regarding its stance on the South China Sea.
the country’s contentious relations between Manila and Bei- It now remains unclear how the Philippines
constitution. jing over ownership of resources in the South and China will move the matter forward. Con-
China Sea. The two countries have tried to come sidering the importance for each country to
WHAT NEXT: to an understanding on joint exploration of secure and exploit future energy supplies, it
It is unclear how the areas that are within the Philippines’ exclusive reasons that the two will be unable to avoid
Philippines and China economic zone (EEZ), but as yet the two sides addressing the topic. Ultimately some basis of
will move the matter remain unable to bridge their differences. China co-operation will need to be found.
forward. adamantly claims sovereignty over nearly all of The Philippines’ new president, Ferdinand
the South China Sea and is in dispute with not Marco Jr., visited China in early January and met
only the Philippines, but all of the littoral states with Chinese leader Xi Jinping, who expressed
whose EEZs extend into the area. Under the UN his desire to continue with the effort to reach
Convention on the Law of the Sea, China is in an agreement on exploitation of the region’s
violation. resources. Prior to his departure for Beijing,
The agreement struck down by the Supreme Marcos said Manila must find a way to exploit
Court involved state-owned Philippines its resources in its EEZ even without China’s
National Oil Company (PNOC), China National expertise. But the risk of facing off with China
Offshore Oil Corporation (CNOOC) and the over disputed offshore territory has caused inter-
Vietnam Oil and Gas Corporation and covered national operators to hold back on investing in
a 142,886-sq km area of the Sea that is not in dis- Philippine waters.
pute. Companies involved with the development During their meeting in Beijing, Marcos and
of Philippine resources must be majority-owned Xi reached agreement on 14 issues designed to
by a Philippines firm, according to the constitu- smooth and improve political, security and eco-
tion. As yet, there is no indication that such a nomic relations. Significantly, the two sides are to
joint agreement will be pursued further. establish a direct communications channel con-
Former Philippines President Rodrigo necting their foreign ministries with the intent of
Duterte negotiated a memorandum of under- quickly defusing any new disputes in the South
standing (MoU) with Chinese President Xi Jin- China Sea. In a joint statement announcing the
ping in 2018 concerning co-operation on joint agreement, both presidents said their respective

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