Page 4 - AsianOil Week 01 2023

AsianOil COMMENTARY AsianOil

China, Philippines strike deal

on South China Sea

The two sides have reached a rapprochement after recent strains in ties, but

the dispute is far from being settled

SOUTH CHINA SEA CHINA and the Philippines have agreed to They will also consider informing each other
resume talks on joint exploration for oil and gas when firing rockets and cooperate on retrieving
WHAT: in the disputed portion of the South China Sea, a rocket debris. Last November, the two countries
Beijing and Manila have month after Manila broke off negotiations. had a diplomatic spat when debris from a Chi-
reached an agreement The two countries agreed on January 5 to set nese rocket fell in the South China Sea and Chi-
on South China Sea up a direct communications channel between nese coastguards stopped a Philippine boat from
cooperation. their foreign ministries to handle the dispute trying to tow it away.
peacefully. In addition to exploration talks, There was also progress on the economic
WHY: the two sides will also discuss cooperation on front, with China agreeing to let in more Philip-
The agreement marks a areas including solar, wind, electric vehicles and pine imports, with the goal of boosting bilateral
rapprochement following nuclear power, their governments said. trade to the pre-pandemic level or even more.
a recent diplomatic Philippine President Ferdinand Marcos Jr They also pledged to increase tourist numbers
spat between the two said his country intended to search for oil in the and flights between their respective capitals, and
countries. contested area alone in December, after it failed cooperate on vaccine procurement. China is one
to reach a joint agreement with Beijing. The of the biggest exporters of COVID-19 vaccines.
WHAT NEXT: South China Sea is one of the most heavily con- They also renewed an agreement on the Belt-
The South China Sea is tested areas in the world in terms of territorial and-Road Initiative, and Chinese investors have
unlikely to be settled ambitions, with six nations – Brunei, Indonesia, committed $22.8bn in investment, including
anytime soon, and Malaysia, the Philippines, Taiwan and Vietnam $13.8bn earmarked for renewables, primarily
Beijing will continue – having claims that run counter to what Beijing solar and wind, $7.3bn for strategic monitoring
strengthening its position considers its own maritime territory. including electric vehicles and mineral process-
with increased military At play is an estimated 11bn barrels of oil ing, and $1.7bn for agribusiness.
operations. reserves and as much as 200 trillion cubic feet “I assure you that our government is commit-
(5.66 trillion cubic metres) of gas under the sea- ted to support your business activities,” Marcos
bed. China has sought to dominate the sea with told Chinese business executives before return-
extensive military patrols and by constructing ing to Manila.
artificial islands. There is no indication that the South China
The Philippines has previously raised con- Sea dispute will be resolved anytime soon. But
cerns over China’s construction activities and as China continues to expand its military oper-
the “swarming” of its boats by dozens of Chinese ations in the region, its bargaining position will
vessels in the disputed waters. only get stronger. However, as this happens,
In a joint statement issued after Marcos met other claimants will likely respond by strength-
with Chinese President Xi Jinping in Beijing on ening military ties with the US, which backs a
January 4, the two leaders reaffirmed that their UN ruling in 2011 that stated that Beijing’s claim
countries would respect each other’s sovereignty to 95% of the sea had no basis.
and territorial integrity. The Philippines will pur- The South China Sea dispute is primar-
sue an independent foreign policy and is willing ily about controlling a global trade route – an
to cooperate in supporting regional peace and estimated $3.4 trillion worth of trade passes
the two countries’ national interests, Marcos said through the area every year. This includes
in a speech after meeting with Xi. around four fifths of China’s energy imports and
“We agreed that maritime issues between the two fifths of its total trade. Another key issue is
two countries do not comprise the entirety of our fishing rights.
relations,” Marcos said, although he cautioned The region’s oil and gas reserves are a very dis-
that the maritime rivalry still represented a “sig- tant prospect. Insufficient exploration has taken
nificant concern and priority” for the Philippines place to determine the commercial value of the
and the region at large. resources, and in any case, the dispute means
Beijing and Manila also agreed that their that international investors would steer clear
respective coastguards would meet “as soon as of any proposed projects, leaving the job up to
possible” to discuss “pragmatic cooperation.” national oil companies. ™

P4 www. NEWSBASE .com Week 01 06•January•2023