OpinionsEcon 101Concerns over oil exploration with China

Concerns over oil exploration with China

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When President Duterte came home from his latest China visit, he brought home around $24 billion worth of deals. Of that amount, $15 billion accounts for company-to-company deals, while $9 billion pertains to loans from credit facilities to be made available to businesses, development projects, and infrastructure, cutting across different industries — agriculture, energy, renewable energy, tourism, and food.

China and the Philippines are set to join efforts to drill for oil and gas — seen to be a short-term win for the Philippines but a long-term reason for China to claim resources offshore Southeast Asian countries.

China claims to about 90 percent of the South China Sea territory, which has put China at odds with its neighbors Vietnam, the Philippines, Taiwan, Brunei, and Malaysia.

A court in The Hague in 2016 ruled against China’s claims, and in favor of the Philippines — a fact that has been ignored by China.

According to an estimate from the U.S. Geological Survey, the South China Sea region holds reserves of some 11 billion barrels of oil and 190 trillion cubic feet of natural gas.

China National Offshore Oil, the state-owned energy company responsible for offshore energy exploitation, provides a much rosier estimate, predicting that the region holds some 125 billion barrels of oil, and 500 trillion cubic feet of natural gas.

Should the Philippines and China reach a deal on joint oil and gas exploration?

“This deal may even embolden China to demand a share of energy resources in other Southeast Asian nations’ exclusive economic zones, in waters that Beijing lays no legitimate resource claim to,” Collin Koh, research fellow at the S. Rajaratnam School of International Studies in Singapore, told Bloomberg.

President Duterte said China wants the Philippines to ignore its legal victory in the South China Sea to push through with the 60 percent (Philippines)-40 percent (China) joint oil and gas exploration deal in the disputed waters.

The territorial disputes over the South China Sea are about much more than energy resources buried in the seabed.

More than $5 trillion in global trade passes through the strategic waterway annually, China sees control of the waterway as a key security concern – not just in terms of national defense but also in terms of energy and economic security.

The linking of various nations’ energy security with political tensions in the South China Sea has driven an uptick in military activity; the US (along with the Philippines), Indonesia and a consortium of nations, including China, Australia, Malaysia, Singapore, New Zealand, the United Kingdom, and Russia, all conducted separate military exercises in or around the South China Sea.

Are we even concerned? Or are we willing to sacrifice national sovereignty in favor of economic activity?

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