The recent ruling of the Supreme Court (SC) on the “Joint Marine Seismic Understanding (JMSU) Among the Philippines, Vietnamese, and Chinese Oil Firms” is quite intriguing. It came a few days after the visit of President Ferdinand Marcos Jr. to China, where one of the landmark gains of the said state visit was the reopening of talks and negotiations on the possible joint oil and gas explorations in the Reed Bank (Recto Bank) in the disputed waters of the South China Sea (SCS) or more popularly known in the Philippines as the West Philippines Sea (WPS).
To a considerable extent, the SC ruling is posing a constraint on the current administration’s pursuit of a possible joint oil and gas exploration with China. This ruling to some extent is akin to a “downer” or a “depressant” in the resurgence of the optimism and buoyancy as the Philippines and China resumed negotiations and talks to actively explore ways for pragmatic maritime cooperation, including joint oil and gas exploration. Hence, it begs to ask, how will the current government take this, and will this SC ruling affect the negotiations and talks on the possible joint oil and gas exploration between the Philippines and China?
In a Joint Statement between the People’s Republic of China and the Republic of the Philippines on oil and gas cooperation published on 05 January 2023, both sides agreed to bear in mind the spirit of the Memorandum of Understanding on Cooperation on Oil and Gas Development between the PRC and the Philippine government signed in 2018, and agreed to resume discussions on oil and gas development at an early date, building upon the outcomes of the previous talks, with a view of benefiting the two countries and their peoples.
Just to recall, in November 2018, during Chinese President Xi Jinping’s visit to the Philippines, China and the Philippines signed the inter-governmental MOU on Cooperation on Oil and Gas Development. The said MOU is thus far one of the significant consensuses achieved by the Chinese and Philippine leaders during the time of President Rodrigo Duterte. The two sides even set up an oil and gas task force under the China-Philippines Bilateral Consultation Mechanism on the South China Sea (BCM), held the first meeting of the Philippine-China Joint Steering Committee on Oil and Gas Development Cooperation in 2019, and exchanged views on cooperation on maritime oil and gas development for several times and had in-depth exchanges on the signing of relevant cooperation document at various levels.
The signing of the MOU between the two heads of state was an apparent testimony to the heightening and strengthening of mutual respect, trust, understanding, flexibility, deepening friendship, and equal-footing negotiation between the two sides within the ambit and in harmony with the UN Charter, the 1982 United Nations Convention on the Law of the Sea (UNCLOS) and the 2002 Declaration of Conduct (DOC) of Parties in the South China Sea. The said MOU was also a significant contribution and emblem of the Philippines and China’s commitment to the proper handling and management of the dispute in the SCS among claimant-states through peaceful, diplomatic, and practical maritime cooperation, which is highly important to regional peace, stability, and development. In this light, the Philippines and China exhibited a pragmatic outlook and good faith, pushing for the deepening of bilateral cooperation between the two sides.
Nevertheless, the 2018 MOU was revoked a few months before the end of President Duterte’s term. On 23 June 2022, the outgoing Philippine Foreign Affairs Secretary Teodoro Locsin Jr. revealed in a speech that President Duterte had decided to terminate oil and gas discussions with China. The revocation of the MOU was a bit of a letdown.
It was indeed a pity that the tremendous efforts and accomplishments of both governments, especially the consensus reached between the two sides, the detailed work, and substantial efforts to ensure legal and transparent bilateral cooperation that would benefit both sides have been offset because the 2018 MOU on Cooperation on Oil and Gas Development was overturned. And it is in this regard and the same spirit, and the same concern is being raised given the recent SC ruling stating that the JMSU is unconstitutional on how this will adversely impact the resumption of talks and negotiations on the oil and gas cooperation between the two sides.
Just a backgrounder, in September 2004, the China National Offshore Oil Corporation (CNOOC) and Philippine National Oil Company (PNOC) signed the Agreement for Joint Marine Seismic Undertaking in Certain Areas in the South China Sea. In March 2005, the national oil companies from China, the Philippines, and Vietnam signed, with the consent of both China and the Philippines, the Tripartite Agreement for Joint Marine Seismic Undertaking in the Agreement Area in the South China Sea. At the same time, the 2007 Joint Statement of the People’s Republic of China and the Republic of the Philippines states that “both sides agree that the tripartite joint marine seismic undertaking in the South China Sea serves as a model for cooperation in the region. They agreed that possible next steps for cooperation among the three parties should be explored to bring collaboration to a higher level and increase the momentum of trust and confidence in the region.“
Unfortunately, in the same manner, the 2018 MOU on Cooperation on Oil and Gas Development between the Philippines and China was overturned because the Philippines was accordingly constrained to proceed because of some related constitutional restrictions, including the fact that the Philippines side insisted that the laws that will govern any possible framework of agreement on the joint oil and gas cooperation between the Philippines and China must be Philippines laws, which expectedly China will not agree, inopportunely, due to the lack of willingness from the Philippine side, the China-Philippines-Vietnam tripartite marine seismic undertaking has failed to move forward. The tripartite agreement expired in June 2008.
Elucidating on Muddled Issues
In the advent of the resumption of the sensitive diplomatic negotiations and talks on the joint oil and gas exploration between the Philippines and China in the Reed Bank, and given the complexities of the SCS dispute, an objective and pragmatic approach is the best way forward. In this regard, it is worth clarifying some issues that have been the source of confusion and miscommunication that muddle the already complex situation of the contested waters of the SCS, particularly between the Philippines and China.
First is to clarify the 2016 SCS Arbitration Award accorded to the Philippines, which has been misinterpreted and was subjected to political manipulation by many to muddle the objective reality surrounding the contested waters of the SCS.
The arbitral ruling did not denote the victory of sovereignty (ownership) over the territorial and maritime claims of the Philippines in the disputed waters of the SCS. This is precisely because territorial matters are not subject to the United Nations Convention on the Law of the Sea (UNCLOS).
This means that the arbitral tribunal did not tackle matters related to territorial sovereignty over the disputed maritime features between the parties, which means that the tribunal did not decide who owned the maritime features located in the SCS, such as the Spratly Islands, are claimed by China and the Philippines and even Vietnam. Similarly, the tribunal did not delimit (demarcate or set limits) any maritime boundaries between the Philippines and China in the SCS. The arbitral award even ruled that the surrounding waters of the Scarborough Shoal are a traditional fishing ground where Filipinos, Chinese, and even Vietnamese can fish. It also stated that the shoal is a rock that cannot generate an Exclusive Economic Zone (EEZ) because it cannot sustain life.
Furthermore, under UNCLOS, it is essential to note the difference between sovereignty and sovereign rights, which are two different things. Based on UNCLOS, sovereignty bestows full rights, or supreme authority, on a country within its territorial waters, which stretch to 12 nautical miles. Anything within the 12 nautical mile area is Philippine territory, meaning that anyone within that zone is subject to Philippine laws. Thus, under international law, the Philippines has sovereignty over its territorial sea (12 nautical miles), but international law does not recognize sovereignty beyond the 12-nautical mile territorial sea.
On the other hand, we don’t have sovereignty over our Exclusive Economic Zone (EEZ) based on UNCLOS. What we have is sovereign rights to use the resources in our EEZ. Thus, sovereignty and sovereign rights are not necessarily synonymous.
EEZ, as prescribed by the 1982 UNCLOS, is an area of the sea in which a sovereign state has special rights regarding the exploration and use of marine resources, including energy production from water and wind. It stretches from the baseline to 200 nautical miles from the coast of a coastal state. The EEZ is outside or does not include the territorial sea or the continental shelf beyond the 200 nautical mile limit. However, the coastal State, in exercising its rights, must have due regard for the rights of other States in the EEZ.
On this note, I guess, as proposed by Atty. Harry Roque, an expert on international law, the SC ruling on JMSU must be revisited and reconsidered. Thus the state or the Philippine government, under the leadership of President Ferdinand Marcos Jr through the solicitor general, should file a motion for reconsideration.
In retrospect, given the complexities of the SCS dispute, the most relevant question is how to move forward concerning the joint oil and gas exploration between the Philippines and China in the Reed Bank (Recto Bank).
Looking at the situation, the way forward is to establish a strategic and pragmatic partnership with China and collaborate on practical solutions to the SCS dispute, which include joint exploration and development of fishing, oil, and gas resources in the contested SCS, coupled with continued shared infrastructure and coordinated investments.
This is a win-win strategy and a solution akin to turning a dilemma into an opportunity that engenders tangible benefits and fosters a better and progressive future for all Filipinos and Chinese, rather than the “zero-sum game” or a “winners take all” approach, or singling-out, targeting, and isolating China. At the end of the day, establishing amity and mutual understanding between the two countries is vital to sound state-to-state relations.
Moving forward, there are practical ways both sides could consider for the joint oil and gas cooperation to bear fruits and become a reality. First, both sides should respect whatever consensus has already been reached. Second, resolving the difference between China and the Philippines through diplomacy and dialogue, maximizing bilateral consultative mechanisms and multilateral mechanisms within the ambit of ASEAN without affecting the two countries’ respective standpoints on sovereign and territorial issues. Third, to focus on substantive and technical issues rather than on politics. Fourth, to have a positive attitude and outlook in carrying out constructive dialogue with strategic visions to promote development cooperation projects and to proactively address the difficulties and challenges faced by both countries over the contested waters of the SCS collaboratively.
With the gains of the recent state visit of President Marcos to China, and given that the bilateral relationship of the Philippines and China has already reached a “Comprehensive Strategic Cooperative Relationship,” there’s so much to look forward to as we pursue achieve mutually beneficial and win-win cooperation between the Philippines and China. And the pursuit of joint Oil and Gas Development and Cooperation between the Philippines and China is one avenue and opportunity to unfold. This joint offshore oil and gas cooperation between the two countries is a pragmatic way for the Philippines and China to achieve win-win cooperation and tangible benefits without necessarily jeopardizing or prejudicing both sides’ maritime claims and posture.