South China Sea claimants should scrap entitlements in possible joint ventures — think tank
MANILA, Philippines — Pursuing a joint venture on oil and gas development in South China Sea would be possible for claimants as long as it would be consistent with international law.
Washington-based think tank Asia Maritime Transparency Initiative (AMTI) suggested that such agreement between South China Sea claimants would have to be consistent with both domestic and international law.
For this to be possible, all claimants should be willing to let go of conducting oil and gas drilling based on their entitlements on disputed features in the South China Sea, the think tank said in its report titled "A Blueprint for Cooperation on Oil and Gas Prouction in the South China Sea."
"Fisheries management areas around the reef systems could provide a politically palatable way to cordon these features off from exploration without dealing with their legal statuses or delimitation issues," the AMTI said.
Foregoing drilling near the disputed islands and reefs would serve as a rationale to focus on petroleum exploration and development on areas closer to claimant states' coasts.
Beijing might see this as a gesture and act of good faith given that they see the islands as fully entitled to exclusive economic zones and continental shelves.
China, on the other hand, would have to accept only a share of profits from oil and gas resources in the contested waterway. This would satisfy the country's claim of "historic rights."
In this scenario, Beijing would also have to accept that other claimants would exercise jurisdiction by licensing the esploration as long as the former is guaranteed a share of the resources.
"This should be possible, given that no Chinese law, official statement, or government document has ever clarified exactly what historic rights Beijing claims," the AMTI said.
The think tank noted that China would argue that even if the United Nations Convention on the Law of the Sea identified the features as islands, delimitations of boundaries of some Southeast Asian countries would result to smaller exclusive economic zones and continental shelves around the features.
The AMTI suggested that claimant states enter into a joint venture in the South China Sea that would involve the concerned parties' national petroleum companies.
"Each joint venture’s sole business will be exploration and production of South China Sea hydrocarbon resources off that country’s coast," it said.
A multiparty corporation established by claimant states would be considered groundbreaking as there are already existing joint ventures among state-owned petroleum companies operating in the region.
Another suggestion for all claimant states was to agree on issuing a license for petroleum exploration and production within 200 nautical miles of their coastlines.
"In areas of overlap, unless a previous bilateral agreement has been reached, a median line should be used to determine which state has the provisional right to license exploration and production," the AMTI said.
The Philippines and China have been in talks for possible joint development projects in the South China Sea since earlier this year.
In March, Foreign Affairs Secertary Alan Peter Cayetano went to Beijing to discuss the possible joint South China Sea project with Chinese Foreign Minister Wang Yi.
The two countries, however, could not push through with the joint project unless a framework on joint and gas exploration is finalized. Two areas are being considered as sites of the joint exploration — Service Contract 57 in Calamian in northwest Palawan and Service Contract 72 in Reed Bank.
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