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Joint development the only way to extract resources from the SCS

Second of 3 parts

HOW to deal with our territorial and maritime-claim disputes, especially with China, in the South China Sea, is one of the most important issues the next president will have to deal with. Unlike other issues about which the candidates can just mouth motherhood statements, a candidate’s stand on this issue cannot be vague.

Following is the second of a three-part series, excerpted from my recently released book Debacle: The Aquino Regime’s Scarborough Fiasco and the South China Sea Arbitration Deception, in which I proposed a three-pronged, realistic strategy for the country to address this crucial issue. I explained last Friday that this strategy involves the following:

1. Tightening our hold on the islands and reefs we have occupied since President Ferdinand Marcos Sr. acquired these in the 1970s by developing them not just as military outposts, but even to the extent of transforming Pag-asa, our biggest island, into a resort for the adventurous superelite (as Malaysia has in the case of its Layang-Layang Scuba Resort in the 1980s);

2. Pursuing joint development with the claimants, which China had many decades back proposed; and

3. “Deprogramming” our citizens from the colossal deception of the Aquino 3rd regime and the Yellow forces — following the US’ dictates — that China is an imperialist villain out to claim all of the South China Sea.


Following is an explanation of the second part of this strategy, extracted from my book Debacle:

On Nov. 20, 2018, the Philippines and China signed an agreement titled “Memorandum of Understanding (MoU) on Cooperation on Oil and Gas Development” between the governments of the two countries. The committee consisting of representatives of the two countries which would implement the agreement met for the first time in October 2019.

While the pandemic had put on hold further meetings, the agreement opened a way for settling the disputes in the SCS: joint development of the resources even in the disputed areas of the South China Sea. That could make the South China Sea, as even a vociferous critic of China, retired magistrate Antonio Carpio, surprisingly wrote, a “zone of peace.”

The agreement’s intent, as its text put it, is to “negotiate on an accelerated basis arrangement to facilitate oil and gas exploration and exploitation in relevant maritime areas.” This, it said, “will be without prejudice to the respective legal positions of both governments.”

Deliberately, the agreement made no mention at all of the territorial and maritime area disputes between the two countries in the Spratlys. The Aquino regime had been foolishly obsessed in getting China to give up its claims, even portraying it as “a creeping invader.”

Duterte reversed that hostile policy, undertook a non-confrontational policy toward China, developed friendship with it and shelved the arbitration award.


The 2018 MoU between China and the Philippines on joint development would not have been possible if Rodrigo Duterte had not reversed Benigno Aquino 3rd’s foreign policy of belligerence toward China. The memorandum proposed that the two governments undertake arrangements — to be determined after “accelerated” talks — that would facilitate “oil and gas exploration in relevant maritime areas consistent with applicable rules of international law.”

Significantly, the agreement declared that these arrangements are “hereinafter referred to as ‘cooperation arrangements.'”

While the agreement did not mention at all the term “joint exploration” by the two countries, the use of the term “cooperation arrangements” indubitably referred to such partnerships. Such arrangements would be formulated by working groups to consist of the China National Offshore Oil Corp. (CNOOC), and representing the Philippines, the “enterprise(s) that has/have entered into a service contract with its government” to explore and develop oil and gas in a particular area.

“If there is no such enterprise for a particular working area, the Philippine National Oil Co.-Exploration Corp. will be designated as the Philippine enterprise for the relevant working group,” the memorandum stipulated.

The memorandum was signed by Chinese Foreign Affairs Minister Wang Yi and Philippine Foreign Affairs Secretary Teodoro Locsin Jr.


While the memorandum does not authorize these two firms to undertake the actual exploration and development of hydrocarbon resources in disputed areas, any reading of the document would conclude that such is its vision.

The extremely careful wording of the agreement was necessary in order to distance itself as far as possible from the first attempt at such collaboration in the Spratlys, the Joint Marine Seismic Undertaking (JMSU) entered into by the Philippines, China and Vietnam in 2005 during the term of President Gloria Macapagal Arroyo.

The 2005 agreement was shot dead in the water by the Yellow opposition and its communist allies as they joined forces against President Arroyo. It was part of their campaign to demonize her in order to undertake a “People Power” kind of uprising to topple her.

They filed a suit in the Supreme Court, still pending after 10 years, claiming the JMSU was unconstitutional, that it would mean the Philippines giving up its exclusive rights to explore and extract hydrocarbons in the Kalayaan Island Group.

With the barrage of totally unfounded allegations on the JMSUs, Arroyo asked China and Vietnam to put the agreement on hold. The agreement ended even before it started and was not renewed when its three-year term ended in 2008.

First Pacific

After that, First Pacific Co. Ltd. accelerated its ambition to become an energy giant via its project in the Reed Bank, which in 2011 triggered the Philippines’ quarrel with China.

While Arroyo’s JMSU was heavily criticized by the Yellow bloc, saying that it violates the Philippine Constitution, there has surprisingly been muted criticism of the 2018 memorandum of agreement, especially from those known to be vehement anti-China critics.

Former justice Carpio, a strident anti-China critic, suddenly paused his continuous harangue against the Asian superpower in his newspaper columns when the news of the agreement broke out and suddenly oozed with optimism in a November 2020 piece titled, “South China Sea as zone of peace.” Why was Carpio suddenly agreeable toward China?

For the first time ever in his voluminous, nearly delirious anti-China writings on the South China Sea dispute, Carpio mentioned Forum Energy. This is the exploration firm owned by the oligarchic trio led by First Pacific, whose survey ship was driven away by the Chinese on March 2, 2011 and ignited the Aquino regime’s hostile policy toward China.

Forum Energy

“Once the Chinese firm enters into a commercial agreement with Forum Energy to extract gas from the Reed Bank, authorized by the memorandum,” Carpio wrote in his column, “the formula for a peaceful settlement of the intractable South China Sea maritime dispute would have been found.”

It is astonishing — or not — that for all of Carpio’s wrath against China, his claims of its wanton grab in the SCS, Forum Energy’s commercial agreement with a Chinese firm for joint exploration suddenly transformed that troubled sea into a “zone of peace.” Or was it precisely Forum Energy that was behind all of Carpio’s furor against China?

Carpio’s column points to the likelihood that the oligarchic trio that owned Forum Energy is backing the agreement, since the arbitration award, five years after it was handed down, proved to be useless, ignored by most countries of the world except for the United States.

A collaboration agreement with China has emerged as the only way for the three oligarchs to recover their tens of billions of pesos in investments and accomplish their dream of being major energy players, although they would have to share profits with the Chinese state firm CNOOC.


What should be a source of confidence over the memorandum that China is serious and aboveboard over it, is that it reflects China’s decades-old declared policy for its disputes with other countries over territorial and maritime claims, which is, as Chinese scholars have termed it, “shelving disputes and pursuing joint development (SDPJD).”

It has even been pointed out: “Chinese academics and officials have highly praised SDPJD, firmly believing that this policy is not only the choice that China should and would stick to when reconciling relevant island territorial disputes, but also that it provides a recognizable point of reference for countries around the globe in settling territorial disputes.”

The reason why this principle has been nearly a dogma for China — even if its claims of sovereignty over the four island groups in the SCS are sacred for it — is that it was Deng Xiaoping himself who first declared it as policy.

Deng Xiaoping is one of China’s most revered leaders and is credited for his market reforms, which led to China’s transformation into an economic powerhouse. It was in October 1978 during his state visit to Japan when Deng was asked to comment on China’s disputes with Japan over Diaoyu Islands in the East China Sea.

Deng replied: “We believe that we should set the issue aside if we cannot reach agreement on it. If our generation do not have enough wisdom to resolve this issue, the next generation will have more wisdom and I am sure that they can find a way acceptable to both sides to settle this issue.”

No option

There is just no other option for the Philippines but to adopt Deng’s advice to shelve the territorial and maritime disputes and to pursue joint development. Either it gets a part of the South China Sea’s natural resources, such as natural gas, or it gets 100 percent of nothing.

The implementation of the memorandum on cooperation in the disputed areas and its development into a joint exploration agreement, would be an earth-shaking agreement. It could transform what some analysts fear is a possible theater for war between China and the US into a zone of peace and prosperity.

China appears to see no problem in undertaking joint development. After all, this has been its revered leader Deng’s view and therefore an unchallenged dogma in Chinese foreign policy and even recently reaffirmed by President Xi Jinping.

In the Philippines’ case, if there is a need to amend the Constitution to allow it, then it should do so. After all, the South China Sea conundrum is sui generis and the framers of the past constitutions, including the 1987 one done during Corazon Aquino’s time, were uninformed about the dispute and the proper way to resolve it.

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This Post Has One Comment

  1. Dorina Rojas

    With or without the SDPJD, Carpio et al would refer to the WPS, debacle and all, as “zone of paradise” because they will financially benefit from it, “for the funds of it”. Of course, never mind the billions spent for the arbitration by the government, Carpio et al already earned in the process. These a—oles never had it so good!

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