ZTE Scandal: The Spratlys Connection

Foregone Claims?

The project, its proponents say, has diplomatic basis, referring to the Declaration on the Conduct of Parties in the South China Sea. It was signed in 2002 by member-states of the Association of Southeast Asian Nations and China. It was supposed to develop confidence among countries. It was supposed to develop confidence among countries after many years of occasional skirmishes or conflicts between claimant countries.

The document doesn’t legally bind the signatories and was just a political statement, says Ralf Emmers, a Singapore-based expert on the South China Sea security issues. The code of conduct may not be able to prevent further clashes over the territories, he said in a September 2005 paper.

Still, the JMSU agreement has positive aspects, specifically in relation to the Philippine claim on an extended continental shelf, the evidence for which should be submitted to the United Nations (UN) by 2009. The Philippines contends that the continental shelf (an under-water landmass that has thinned out over millions of years) in the Spratlys is an extension of the one in Palawan. If the Philippines, through the JMSU arrangement, can gather enough geologic evidence that its continental shelf extends to the Spratlys, then it would have a firmer claim on the territory.

Roque says that the UN Commission on the Limits of the Continental Shelf (UN-CLCS) anyway is not going to act on any submission if it covers a disputed territory. If the JMSU agreement can lead to an amicable settlement of the dispute, then the UN can take up the Philippine case.

Geologist Mario Aurelio of the Mines and Geosciences Bureau represents the Department of Environment and Natural Resources in the informal technical working group that’s putting together the Philippines’ evidence for the claim on the extended continental shelf. He says that a considerable portion of the evidence that the UN-CLCS requires can be collected through the seismic survey being conducted under the tripartite agreement.

Two long-time exploration geologists, who work for different companies, caution. “The JMSU arrangement may be good for science, but it could be used by PNOC’s partners in a way that could hurt the Philippines politically and commercially in the future,” one of them says. “With the JMSU, the Philippines effectively acknowledged that it’s disputed, that it’s not ours…and we might not be able to explore and exploit the area alone from now on.”

This sentiment is shared by some in government. The latest Geophysical Survey and Exploration Contract (GSEC 101) in the Spratlys was awarded by the DOE to Forum Energy, a UK-listed company. The contract was extended before the signing of the tripartite agreement and is still in effect. The awarding of the contract, a unilateral action by the Philippine government, could therefore be interpreted as a statement that the Philippines is asserting its sovereignty over the area. But the area covered by GSEC 101 was included within the coverage of the tripartite agreement.

In what could be a corporate strategy, Forum Energy last June named Oscar de Venecia, brother of the House Speaker and himself an oil industry veteran, as board director. Meanwhile, his son, Oscar Jr., is president of Forum Energy Philippines Corp., the local arm of the UK firm.

‘Resolve Territorial Dispute First’

But what happens if the three national oil companies confirm the presence of petroleum deposits in the area? The tripartite agreement is silent on this.

Mañalac acknowledges that when the time for drilling comes, the issue has to be settled: “Under whose laws and then under whose contracts are we going to drill? Then issue of ownership and sovereignty will have to come in.”

The governments should then “sit together and formulate the model contract that they will offer these oil companies.”

He says that China and Vietnam are amenable to dividing equally into three the resources that will be harnessed for this. “The problem is with the Philippines,” he says, because its Constitution provides that only companies that are at least 60 percent Filipino-owned can exploit natural resources. The Arroyo government is moving to amend the Constitution to relax the 60-40 rule.

But Emmers says that the “reverse” strategy might not work, citing the experiences of other countries. “Territorial disputes,” he says, should be resolved first before the exploration and exploitation of living and non-living resources can start.” (with reports from Isagani de Castro Jr. and Mia Gonzalez)

Reprinted with permission from Newsbreak.