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Revealed: The crux of our SCS dispute — natural gas

THE flag-waving by the Yellows, the likes of United States toady Albert del Rosario and Vietnamese-linked Antonio Carpio, claiming that they are noble patriots upholding Philippine sovereignty against a sionist China in the South China Sea (SCS), is total hogwash.

Wittingly or unwittingly, they have been actually serving the US agenda since US President Barack Obama’s “Pivot to Asia” policy started in 2009: Isolate its rival, the emerging superpower China from its Southeast Asian neighbors.

Complying with the US national interest though has been and will be at a huge cost to our national interest. Because of the past Yellow regime’s hostile stance against China, and the grand deception over the arbitration suit’s award, we are being impeded from extracting a huge source of hydrocarbon — natural gas mainly — in the SCS, more precisely at the Reed Bank* in the Spratlys, the Kalayaan Island Group to us.

It has become an urgent necessity for the country to tap that source of gas: the Malampaya-Camago Gas Field which since 2002 has provided 20 percent of our power requirements, will be running dry by 2024. The energy department has no “Plan B” for this eventuality, except to build ports to facilitate the entry of imported gas. President Rodrigo Duterte seems to be aware of the huge loss Malampaya will be and has floated the idea of commissioning the Bataan Nuclear Plant.

The Malampaya gas field, which we need to replace urgently. PHOTO: SHELL PHILIPPINES

The easier source of energy would be Reed Bank, specifically its so-called Sampaguita Gas Field, which could well be the “new Malampaya” — if we rush now to explore and develop it. But this could be undertaken only with a joint agreement with China.

The Sampaguita Field was estimated in 2012 as having 4.7 trillion cubic feet of gas deposits, nearly twice that of Malampaya’s 2.6 trillion cubic feet when it was discovered in 1992. This notion is bolstered by the fact that the Malampaya Gas Field is just 250 kilometers away from it, roughly in the area off Palawan where we have had our oil wells, such as the Nido, Masinloc and Galoc.

The Chinese have for decades proposed to all claimant countries a joint, collaborative development of resources in the disputed territories in the Spratlys, including hydrocarbons. This is not propaganda. It was Deng Xiaoping himself — the third most revered leader of China, and the architect of its economic development — who laid down this doctrine for his country’s stance in the South China Sea: “Set aside dispute and pursue joint development.”

US agenda

However, the Yellows and especially the three stooges of the South China Sea issue — as a cover to implement the US agenda to demonize China — will have absolutely none of this, and have kept repeating the infantile slogan “What is ours is ours.”

But the Yellows already tried this “what-is-ours-is-ours” tack in March 2011, with disastrous results.

Just a week after Aquino appointed Del Rosario as his foreign secretary, the Indonesian-owned First Pacific — the latter’s main source of income as an official of the company and its subsidiaries for over two decades — deployed the exploration vessel MV Veritas Voyager to the Sampaguita Field on March 2, 2011 to determine where to drill its first wells.

The latter part of the Arroyo administration and the new Aquino regime, without even informing China, had junked the agreement that the Philippines made with the Chinese in 2007 that it would not authorize any enterprise to undertake exploration and development activities for hydrocarbon deposits in the Reed Bank.

The Arroyo administration quietly reneged on this pact in 2009, right after the port magnate Enrique Razon took a 30 percent stake in the rights to the Sampaguita Field, called Service Contract (SC) 72.

That MV Veritas Voyager in effect meant a weaker nation throwing the gauntlet at China, without any explanation why it junked an earlier Philippine-China agreement that no such activity in the area would be undertaken without permission from each country.

Mao Zedong

What were Aquino, del Rosario, Razon and the major First Pacific owner the Indonesian Anthoni Salim, thinking? That China would just sit by idly, and watch that enterprise — which would most definitely later get US and Western oil firms as partners — build gas wells in the Reed Bank, which Mao Zedong himself warned President Ferdinand Marcos not to do when they met in Beijing in 1975? Had they been so absorbed in their wild dream that they would be catapulted as regional energy magnates, they closed their eyes to the fact that China also claimed the area?

This could replace Malampaya if we have the political will. (Map by author using Google Earth Pro)

Chinese maritime surveillance ships of course drove away the vessel, and warned it would do so again. That stopped dead in the water First Pacific’s dreams of becoming an energy conglomerate, for which it had already spent over P25 billion — mainly for acquiring Philex Mining that had rights to the SC 72.

The Aquino government after that adopted an antagonistic stance towards China, which fortunately for us, his successor President Duterte reversed.

Instead of seeking ways to arrive at an arrangement for a joint development of the hydrocarbon deposits there with China (and perhaps with Vietnam, which also claims the area), the Yellows — US toadies from the start — whipped up an anti-Chinese frenzy, claiming that the Chinese have no right at all to that area, and that we would be surrendering our sovereignty if we agree to a joint collaboration for extracting hydrocarbons there. This is so wrong.

The arbitration suit brought by the Aquino administration against China was in part intended to get an international body — even if it was only an arbitration panel, and not a court deciding on an issue of international law — to rule that the Philippines had the rights to the Reed Bank.


The arbitration award did rule out that the “Philippines [had] sovereign rights over the non-living resources of its continental shelf in the area of Reed Bank.” By “sovereign rights” is meant the Philippines’ rights to develop its resources, as it is within its exclusive economic zone (EEZ), the area 200 nautical miles from its mainland.

But this was deviously misleading in what the arbitral panel was silent about: China’s claim that it is its sovereign territory.

China claims the Reed Bank not because it is within its EEZ nor within its undefined the nine-dash line covering a huge swathe of the South China Sea, but because it claims that it is its sovereign territory, the Nansha archipelago declared as part of its lands through several of its domestic laws and international treaties. (A rough analogy would be the fact that while our 200-nautical mile EEZ would cover Indonesia’s Talaud and Singhe islands, we do not claim any sovereign right over these, as these have long been part of Indonesia’ sovereign territory.)

But the arbitration panel could not decide on which claim — the Philippines’ EEZ or China’s sovereign-territory claim — is legitimate because its jurisdiction, established under an international treaty, the United Nations Convention on the Law of the Sea, is limited only to the determination of maritime entitlements, such as the extent of countries’ sovereign rights if their EEZs overlap.

Under international law and all states’ practice, sovereignty issues cannot be decided upon by any body, except if the two or more claimant countries agree to do so.


In essence, the arbitration suit was merely a clever sophisticated propaganda operation intended to confuse the real sovereignty dispute in the Spratlys and create global and Philippine public opinion that we have the superior claim to the Reed Bank.

While the Yellows seem to have succeeded — partly — in their aims, with even Duterte recently declaring (very falsely) before the United Nations General Assembly that the arbitration “award is part of international law and beyond compromise.”

However, the arbitration suit backfired for the Philippines: It only strengthened Chinese resolve to insist on their sovereignty claims in the South China Sea, especially as the arbitration was viewed in China as obviously a US scheme — with the suit entirely handled by a Washington, DC law firm.

The arbitration stirred up a lot of Chinese nationalist passions, which before the arbitration suit had been put in the background because of China’s focus on economic development. What had been far from ordinary Chinese’ consciousness — the Nansha archipelago and Scarborough Shoal — became an issue of intense nationalism, so much so that in 2012 at the height of the Scarborough stand-off, there was an uproar in China’s social media that the Chinese Navy kick out the Philippines not just from the shoal but from the entire Spratlys.


The suit’s award and the consequent heightened patrols by the US Navy (euphemistically called freedom of navigation operations) in the South China Sea occurred in a period when China’s Peoples’ Liberation Army Navy has nearly reached a level of military parity with the US that the Americans cannot simply push the Chinese this time around, unless it is willing to risk a war, even a limited one, with China.

One would be in extreme delusion to believe that China in this day and age will give up its sovereignty claims over the Reed Bank, or even be forced to do so by the US. Del Rosario and Carpio are in a serious denial of reality in thinking that the arbitration award — increasingly questioned by many international law academics, with only a handful countries demanding for its enforcement — could make China give up its Nansha archipelago.

This is especially so since the legitimacy of the Communist Party of China is based not only on its success in developing the economy, but as champion of China’s nationalist ideals, which since the turn of the century has been linked with its capacity to assert its claims of territorial sovereignty.

Whatever the arguments for or against the sovereignty claims of the Philippines, China and Vietnam, these are at the end of the day, hot air. The reality is that each will not budge from their positions, nor can any international panel intervene to settle the disputes.

China, the world’s 5th largest natural gas importer, is hardly in need of that fossil fuel from the Reed Bank, at least at this time. Most of its natural gas supply come from wells in China’s inner mainland, from Myanmar, Central Asia, and soon from Russia, transported through pipelines. For the Chinese, gas from the Reed Bank isn’t economically viable as it has to be transported more than a thousand kilometers to its nearest mainland.


That is in contrast to our situation. Pipelines could be easily built to move Reed Bank’s gas 200 kilometers to the Malampaya gas field, which has existing 500-kilometer pipelines to the Batangas facility, which distributes the fuel to five power plants.

Duterte reported last year that Chinese President Xi Jinping told him that if he ignores the arbitration, China would agree to be the junior — i.e., a 40 percent — partner in a joint venture to develop gas deposits at the Reed Bank.

The Yellows of course raised an outcry: this is not what their US masters want. For them, especially del Rosario and Carpio, 100 percent of nothing is infinitely better as long as they are portrayed as fierce patriots fighting China, rather than 40 or even 60 percent of a new gas source. Indeed, the quip of English writer Samuel Johnson long ago — “Patriotism is the last refuge of a scoundrel” — is so applicable to them.

The Malampaya wells have been owned 55 percent by the Royal Dutch Shell, 45 percent by the American Chevron, and just 10 percent by the Philippine National Oil Co. China’s leader Xi is offering us 60 percent. We refuse because our partners will be Chinese?

All we need is to see through the Yellow toadies’ propaganda, and for Duterte to have the political will.

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