RP inks oil search pact with China, Vietnam

Oil companies of the Philippines, China and Vietnam signed yesterday a landmark tripartite agreement for a $15-million joint marine seismic undertaking in the South China Sea for a period of three years, a move President Arroyo described as a "historic breakthrough" in developing the area of conflict among Asean countries and Beijing into a possible energy source.

The President congratulated the Philippine National Oil Co., the China National Offshore Oil Corp. and Vietnam Oil and Gas Corp. for the successful negotiations leading to the accord.

"This is a historic event because it is the first, it is the breakthrough in implementing the provisions of the code of conduct in the South China Sea among Asean and China to turn the South China Sea into an area of cooperation rather than an area of conflict," the President said after the signing of the agreement in Makati City.

"Not only is it a diplomatic breakthrough for peace and security in the region, it is also a breakthrough for our energy independence program because one of the elements of this program is to work on strategic alliances with our friends and allies so that we can have more supply of energy for the region and our country," she added.

In a joint statement, the three parties expressed their desire to engage in a joint research of petroleum resource potential in the agreement area as a pre-exploration activity. The joint activities will be conducted in the agreement area in accordance with the seismic work programs approved by the parties.

The agreement will cover a period of three years and is expected to begin before the rainy or typhoon season arrives. The joint activities will cover an area of about 143,000 square kilometers which is defined by specific geographic cordinates.

In their statement, the three parties affirmed that the signing of the tripartite agreement would not undermine the basic positions held by their respective governments on the South China Sea into an area of peace, stability, cooperation and development in accordance with the 1982 United National Convention on the Law of the Sea and the 2002 ASEAN-China Declaration on the Conduct of Parties in the South China Sea.

Vietnamese Ambassador Dinh Tich said his government decided to join the undertaking because the South China Sea should be transformed into an area of peace, stability, cooperation and development.

"We have to look for (the) best thing for the region, for our interest. We have to do it collectively. (We were) not compelled (to join), this is our interest, common interest. We discussed this equally among us," the ambassador said.

Energy Secretary Vicente Perez Jr. said the agreement was a product of "oil diplomacy" and power of persuasion during meetings and dialogues that started since last year.

Perez and PNOC president Eduardo Mañalac clarified that what was signed was a mere commercial agreement that would not compromise any countries territorial claims over the sea.

"In the past century there was the so-called gun boat diplomacy. Now we are pushing for seismic shift diplomacy," Perez said.

Perez said the estimated $15 million expense for the undertaking would be shouldered by three parties equally, or at least $5 million each.

Perez said the joint seismic research would only involve the use of seismic vessels but no drilling would be conducted.

"We will just study the potential petroleum resources of the area. This is very important. This is also right on time because of the rising oil prices. This is a big step towards the so-called Asian energy independence," Perez said.

"Here in Asia, more than half of our oil supply needs come from the Middle East so this is good. This is already the last frontier, the South China Sea because we already (discovered) oil in Palawan, Indonesia and Malaysia," Perez said.

Perez noted a successful study of the South China Sea’s oil potential could also work to finally resolve the long-standing conflict in the area.

"It’s a good thing that this happened so that once and for all, we would know. If there’s none, then at least everybody (becomes aware there is none)," Perez said.

Perez said other claimants who might want to participate or raise concerns over the agreement could talk to the Philippines, China and Vietnam.

Mañalac, for his part, siad he is pleased that the Philippines managed to succeed in this initiative and expressed hopes that the agreement could be the model for future multilateral accords among different oil companies from the various countries in the region.

"In othe words, we have proven that it can be done, that you can negotiate a multilateral agreement without discussions about sovereignty," Mañalac said.

"The key is for the governments to sit together and formulate the model contract that they will offer these oil companies in the future," he said.