WITH my past as a business reporter and before that a Marxist believing in the idea that economics make up the base for every social phenomenon, my intellectual instinct was, to use that phrase loosely, to “follow the money” in investigating why the Aquino 3rd regime became hostile to China, that it even “shamed it” by filing a suit at an international body.
America’s geopolitical initiatives at that time (i.e., Obama’s “Pivot to Asia” to contain China’s rise in the region) of course, was a major factor given that administration’s willingness to serve as the American proxy in Southeast Asia. However, it was China’s blocking of a huge project of three oligarchs* in the South China Sea that explains Aquino’s subsequent belligerence towards it.
If President Duterte had not reversed Aquino’s position, the country would have slipped to a severe economic recession: China accounts for nearly a third of our exports and a fourth of its imports.
All these are reexplained, with documentation and sources provided in my book, Debacle: The Aquino Regime’s Scarborough Fiasco on the South China Sea Arbitration Deception, now available for online orders at rigobertotiglao.com/debacle, at Popular Book Store and La Solidaridad.
WHAT triggered the Aquino 3rd regime’s belligerent stance against China that led to the unprecedented Philippine arbitration case against it, and which sustained the anti-China campaign in the country, was the ambitious and rushed project of three oligarchs to become energy giants in a few years.
The trio’s project — with Forum Energy as the operating company — was to extract natural gas from the Sampaguita Gas Field in the Reed (Recto) Bank in the Spratlys or Kalayaan Islands.
The Sampaguita field was estimated in 2005 to have 21 percent more gas deposits than the Malampaya well off Palawan, which has provided a fifth of the country’s energy requirements since 2002.
The existing Malampaya well is estimated to start running out of gas by 2024. That made the three magnates’ project urgent, since the five power plants in Luzon Island using Malampaya gas since 2002 would be ready markets.
Would-be energy giants
Located just 250 kilometers from Malampaya, a Sampaguita well could just pipe its gas to that existing platform, which already has a 500-km gas pipeline to Luzon feeding five power plants. The three oligarchs therefore could have been in a few years energy giants in the region. Since it started in 2002, revenues of Shell and Chevron from Malampaya have been estimated to total $90 billion,
This Recto Bank oligarchic trio was, and still is, led by the Indonesian magnate Anthoni Salim, through Hong Kong-based First Pacific Co., of which he is the biggest owner and controller. Through several layers, this holding company of a vast conglomerate is the majority stockholder of Philex Mining. This in turn has a subsidiary, PXP Energy (formerly Philex Petroleum Corp.) which owns Forum Energy. The government had issued in 2009 Forum Energy “Service Contract No. 72” (SC 72) that authorizes it to explore for and extract oil and gas in a specific area in the Sampaguita oil field in the Reed Bank.
Salim’s main partner in the Reed Bank project is the container-port and casino magnate Enrique Razon, who has 30 percent stake in SC 72 itself. It was Razon who convinced the energy department in 2010 to issue the service contract to Forum Energy. Before Razon joined the trio in 2008, Forum Energy only had what is called a geophysical survey and exploration contract (GSEC), or the limited authority to explore for gas and oil — but not to extract it.
The third stakeholder in the Reed Bank project is former Marcos technocrat and luxury-property developer Roberto Ongpin, who has 20 percent ownership of Forum Energy through his listed firm, Atok Big Wedge. It was Ongpin who led an investors’ group in 2008 to sell the last tranche of Philex Mining to First Pacific that gave it full control of the firm.
First Pacific had to buy Philex Mining — spending about P25 billion — because the mining firm through corporate layers had owned Forum Energy.
In total, the three oligarchs had plunked down at least P50 billion for its Reed Bank project. Seems huge, but still a drop in the bucket considering the hundreds of billions of pesos in potential revenues they could get from the Malampaya-like gas well.
Still, the money spent by Salim on the Reed Bank project is the biggest single investment of First Pacific anywhere in the world, ever since its purchase in 1998 of the then telecoms monopoly Philippine Long Distance Telephone Co. for P32 billion.
The trio’s project took off the ground when its seismic survey ship MV Veritas Voyager sailed for the Sampaguita Oil Field on March 2, 2011 to undertake seismic surveys and determine locations of gas deposits where exploratory wells would be drilled.
That was just several days after Albert del Rosario’s February 23, 2011 appointment as Aquino’s foreign affairs secretary. In that post, del Rosario would be Aquino’s prime adviser on how to deal with China. This author’s sources claim that del Rosario practically directed Aquino in every phase of his government’s hostile policy towards China.
Del Rosario has been in the employ of First Pacific for many years, as director in its Philippine subsidiaries and in the Hong Kong-based mother firm itself. His income from the First Pacific conglomerate — at least P200 million, from its subsidiary PLDT alone — actually makes him one of the richest men in the Philippines. While he went on leave as director of these companies, as required by Philippine law for a government official, he got his old directorships back as soon as he stepped down as Aquino’s foreign secretary.
The Veritas Voyager’s surveys were still to be completed when on March 2, 2011 two ships of the civilian China Marine Surveillance (CMS) drove it away from the area, radioing that it was on waters under Chinese sovereignty and that it had no permission to undertake surveys for oil and gas. The vessel promptly left the area.
Aquino immediately and publicly expressed anger at China for driving away the private (not government) vessel from Reed Bank. In his July 2011 State of the Nation Address, a speech usually reserved to discuss the country’s most important problems, Aquino practically proclaimed that his administration would take up the cudgels for the three oligarchs’ project: “What is ours is ours. We will defend Recto Bank as if it were Recto Avenue.”
He even divulged in that speech his government’s next move against China: “We are already studying the possibility of elevating the case on the West Philippine Sea to the International Tribunal for the Law of the Sea.”
Aquino even hinted in that speech that the Philippines was prepared to use military force to assert Forum Energy’s rights to extract hydrocarbons in the Reed Bank, stating the country was “ready to defend what is ours.” He also announced that the armed forces would be modernized to defend the country’s claims in the area.
“At this very moment, our very first Hamilton Class Cutter (a refurbished US Coast Guard ship) is on its way to our shores,” he boasted in his SONA. “We may acquire more vessels in the future V these, in addition to helicopters and patrol crafts.”
The Aquino government that year allocated P5 billion for buying helicopters and setting up radar stations, specifically in order to strengthen the country’s defense of its oil and gas assets near Palawan.
After the Reed Bank incident, Aquino announced he had changed the country’s entire defense focus from its decades-old internal security aimed against the communist and Islamic insurgency, to one of “territorial defense” — his euphemism for challenging China in asserting the Philippines’ claims to the Spratlys.
In concrete terms, the Aquino regime wanted its entire military to come to the rescue of the three tycoons’ stalled project to extract hydrocarbons in the Reed Bank.
In order to salvage the First Pacific project, its CEO Manuel Pangilinan went to Beijing in May 2012 to offer the China National Offshore Oil Corp. a stake in the venture.
The Chinese outrightly rejected his offer. They most likely still remembered Aquino’s 2011 rant against China in his SONA as well as his boasts that the US will give warships to the Philippines to patrol the seas against alleged Chinese intrusions.
Perhaps China would have considered Pangilinan’s offer if Aquino had pursued bilateral negotiations with the Chinese government instead of taking a belligerent stance. Ignoring the tools of diplomacy, Aquino 3rd even raised his truculence up several notches.
Aquino’s hostility toward China though was so ill-thought that it led to the loss of Scarborough Shoal to the Chinese in June 2012, a debacle for the Philippines.
Then in January 2013, the Aquino administration initiated arbitration proceedings against China, alleging that it had violated provisions of the United Nations Convention on the Law of the Sea and deprived the Philippines of its sovereign rights in its exclusive economic zone.
While the Aquino regime asked the arbitral panel to rule on some 14 claims, its main intent, as President Aquino himself had disclosed in his July 2011 SONA, was to force China to allow the three oligarchs’ project to explore and extract gas in the Reed Bank.
The blowback though was that the suit gave China the excuse, as its defensive move against that “lawfare,” to transform those reefs it had occupied in the Spratlys since 1988 into huge man-made islands, complete with air strips, deepwater ports, and all facilities that could transform these into military installations. China tightened its presence in the South China Sea
The arbitration suit against China turned out to be a debacle for its real architect — the US.
*I use the term “oligarch” not in its conventional use to refer to Russian magnates who grew unbelievably rich when the USSR was dissolved, but to its broader meaning referring to the very small elite of tycoons that political economy says actually rule a capitalist country, and/or whose businesses or business projects present or the past had required a government green-light.
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This Post Has 2 Comments
Mga tunay na demonyo ang mga Aquino kasama ng mga walangya nyang tauhan
Amazing but not really surprising truth. A lot of people have already been fooled by BS Aquino and his gang of liars but as the song goes, ” the end is near I will take all the blows because I did it my way”.
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