The governments of China and the Philippines have signed a memorandum of understanding for cooperation in oil and gas exploration and development, easing a territorial dispute in the South China Sea.
The MOU was one of a series of documents signed on various subjects during meetings in Manila between Chinese President Xi Jingping and Philippines President Rodrigo Duterte.
In 2016, the Philippines government won a United Nations arbitration challenge to China’s claim to nearly all the South China Sea. Brunei, Malaysia, Taiwan, and Vietnam also challenge the Chinese territorial assertion (OGJ Online, Mar. 26, 2018).
The Philippines wants to include an area it calls Rector Bank, which China calls Reed Bank, in a future licensing round. It suspended exploration of the area in 2014 because of the territorial dispute but wants exploration to advance before deepwater Malampaya gas field offshore Palawan depletes. The country depends heavily on Malampaya gas for power generation.
Duterte has not pressed for enforcement of the arbitration ruling. His government began discussing joint exploration with China last year (OGJ Online, Aug. 17, 2017).
In a joint statement in Manila, the governments agreed “to exercise self-restraint in the conduct of activities in the South China Sea that would complicate or escalate disputes and affect peace and stability.”
The oil and gas MOU calls for the formation of a steering committee involving the countries’ foreign and energy ministries to produce cooperation agreements within 12 months.