Philippines’ Oil Agreement With China Sparks Fears of Losing South China Sea Claims


China signed 29 memorandums of understanding (MOUs) with the Philippines during President Xi Jinping’s first state visit to the country, including a controversial MOU to explore for oil and gas together that sparked fears it may involve work in disputed areas of the South China Sea.

Xi’s visit, the first Chinese state visit to the Philippines in 13 years, highlights the strengthening ties between Beijing and Manila, according to Philippines President Rodrigo Duterte. Speaking of the two leaders’ meeting on Tuesday, Duterte said, “We chartered the future course of China-Philippines relations and drew an ambitious blueprint for its development,” according to a government release.

The detente comes after several years of mounting tensions regarding ownership of large swaths of territory in the South China Sea, which culminated in a ruling by the Permanent Court of Arbitration that fully backed the Philippines’ claims in July 2016.

However, rather than press the point, the then-recently-inaugurated Duterte said he would instead work with China to jointly develop the 4 trillion cubic feet of untapped gas reserves that the U.S. Energy Information Administration estimates lies within Philippine territory.

The MOU signed on Tuesday lacks detail and mentions only joint gas and oil development and not disputed territories. However, several reports cited Philippine Energy Secretary Alfonso Cusi as later saying that the deal will cover South China Sea development.

Philippine outlet Rappler reported on Tuesday that its sources confirmed the countries will create an agency to explore how joint exploration might proceed, but that this will not necessarily lead to joint marine exploration.

The move is likely to spark strong opposition among Philippine lawmakers, who argued that Duterte risks surrendering the country’s claims over disputed territories such as resource-rich Reed Bank, while lies just 90 miles off the country’s Palawan Island.

Former Solicitor General Florin Hilbay called any joint exploration deal “illegal and unconstitutional,” according to domestic outlet PhilStar, and a group of opposition senators called for greater transparency for the terms of all 29 MOUs.