China’s SCS expansion weakening Philippines energy security — experts

MANILA, Philippines — China’s blocking of exploration of possible power sources in the South China Sea by the Philippines has weakened the country’s energy security, maritime experts said. 

“The Philippines has been eager to tap natural gas reserves beneath Reed Bank for over a decade but has been stymied by Chinese opposition,” wrote Bonnie Glaser, senior adviser for Asia at the Center for Strategic and International Studies, and Gregory Poling, director of the Washington-based Asia Maritime Transparency Initiative, in a commentary. 

Glaser and Poling referred to an incident where a survey vessel hired by Forum Energy, which is majority owned by the Philippines’ PXP Energy Corp., was expelled from the area by Chinese naval vessels in 2011. 

Their commentary, titled “Vanishing Borders in the South China Sea,” was published on June 5 in the magazine Foreign Affairs.

 Under the government of President Duterte’s predecessor, Benigno Aquino III, Manila’s PXP Energy, then known as Philex Petroleum, discussed possible joint exploration with Beijing’s China National Offshore Oil Corp. or CNOOC. 

In 2013, negotiations between PXP Energy and CNOOC was stopped after the Philippine government contested the validity of Beijing’s sea claims before a United Nations-backed tribunal. 

The Hague-based Permanent Court of Arbitration ruled in favor of the Philippines in July 2016, shortly after Aquino’s successor, President Duterte assumed office. 

The ruling awarded the Philippines “sovereign rights” over Recto or Reed Bank, Panganiban or Mischief and Ayungin Shoal.

Duterte, however, refused to honor the ruling and instead sought closer diplomatic and economic ties between the Philippines and China. 

Duterte’s spokesperson Harry Roque earlier said a joint exploration between Filipino and Chinese companies in disputed waters is “likely to happen” as talks are “moving forward.”  

PXP Energy chairman Manuel Pangilinan in May said he is “hopeful” that the Department of Energy would allow work to resume in the area covered by PXP Energy’s service contract.  

But Glaser and Poling noted Beijing’s behavior in the South China Sea is not related to China’s vast energy demand. 

Citing data from the US Energy Information Agency, the experts said the South China Sea holds about 14 trillion cubic meters of natural gas and 16 billion to 33 billion barrels of oil, most of which lie under the continental shelves of China’s Southeast Asian neighbors. 

“For perspective, Chinese energy demand in 2018 is expected to top 12.5 million barrels of oil per day. The exploitable oil and gas reserves on the continental shelves of the Philippines and Vietnam would be a mere drop in the bucket given China’s demand,” they said. 

“The primary purpose of China’s call for joint development is not to quench its thirst for energy but to strengthen its claims,” they added. 

The Philippines generates nearly half the electricity for its main island of Luzon from a single source, the Malampaya gas field, which is expected to start running dry around 2024. 

“Unless an alternative is found, the country will need to either import significant amounts of natural gas, rapidly incorporate other energy sources into its power supply, or face severe shortages,” the experts said. 

They said Reed Bank is Manila’s best option to replace the supply from Malampaya, but preparing a new gas field is expected to take about 10 years.  

“That makes each day it fails to undertake exploration ultimately costlier than the last,” they said. 

The experts said in Vietnam, China suspended two natural gas drilling projects on the country’s own continental shelf. 

Compelling Manila and Hanoi into sharing resources in these areas would help legitimize China’s assertions that it maintains historic rights throughout the South China Sea, Glaser and Poling warned. 

“If Vietnam and the Philippines are forced to undertake joint development and give up their exclusive rights, it would deal a heavy blow to the rules-based order, and to US credibility as a protector of that order,” they said. 

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