Philippine President Rodrigo Duterte has approved the lifting of a six-year-old ban on oil and gas exploration in or near disputed areas of the South China Sea. The ban was imposed in 2014 due to escalating territorial tensions with China, and its removal will test just how far the country and Beijing are willing to compromise over rival maritime claims – and the US’s resolve to back Manila.
On Friday Philippines’ Energy Secretary Alfonso Cusi confirmed that companies awarded contracts to explore for oil and gas in three sprawling areas off the western Philippines in the South China Sea have been asked to resume their search operations, including in the potentially oil-and gas-rich region of Reed Bank.“We trust China will respect our sovereign decision,” he said. “We need to explore so we may address the country’s energy security.”
Around 40% of the power consumed by Luzon – the country’s largest island, its political centre and its economic engine room – currently originates in the offshore gas field of Malampaya, but this is expected to run dry by the end of the decade. With Manila on a mission to phase out its coal-fired power plants and the small size and relatively high cost of renewable energy sources, the South China Seas’s reserves of natural gas are the country’s obvious alternative.
Unfortunately for the Philippines, most energy companies have refrained from bidding on the offshore blocks that Manila has offered. This is not for commercial reasons, but rather because they do not want to bear the security risks that come with energy exploration in waters that are within or even close to China’s self-proclaimed nine-dashed line.The recent escalation in the US-China trade war has only exacerbated the situation, with President Trump’s administration has repeatedly raising the alarm over China’s increasingly aggressive actions in the disputed waters. Beijing in turn has responded by warning Washington to stay out of what it says is a purely Asian dispute.