Memorandum of understanding inked by Philippines, China study on oil exploration cooperation

November 26, 2018
Teodoro Locsin Jr.

MALACAÑANG yesterday released a copy of the memorandum of understanding (MOU) on the cooperation on oil and gas development between the Philippines and China.

The signatories to the three-page document were Philippines’ Foreign Secretary Teodoro Locsin Jr. and China’s Foreign Minister Wang Yi.

Locsin said last Thursday there was no agreement yet for the Philippines and China to start joint exploration in the disputed waters, adding the MOU signed on November 20 during the state visit of Chinese President Xi Jinping merely seeks to study and discuss the prospects of a possible energy cooperation between the two countries.

The MOU stated that both governments agreed to establish an intergovernmental joint steering committee to look into possible energy cooperation.

The committee — to be co-chaired by the foreign ministries and co-vice chaired by the energy ministries — “will be responsible for negotiating and agreeing the cooperation arrangements in maritime areas to which they will apply and deciding the number of working groups to be established and for which part of the cooperation area each working group is established.”

“Each working group will negotiate and agree on inter-entrepreneurial, technical, and commercial arrangements that will apply in the relevant working area,” the MOU read.

“This [memorandum of understanding], and all discussions, negotiations, and activities of the two governments or their authorized enterprises under or pursuant to this (MOU) will be without prejudice to the legal positions of both governments. This (MOU) does not create rights or obligations under international or domestic law.”

President Rodrigo Duterte temporarily set aside the 2016 ruling of The Hague-based Permanent Court of Arbitration that invalidated China’s excessive claims in the South China Sea in order to forge stronger trade and economic ties with China even as he promised to raise the decision at a proper time during his term which ends in June 2022.

China does not recognize the ruling and has maintained sovereignty and ownership over the resource-rich waters.

Under the MOU, each working group that will look into a possible exploration deal between the Philippines and China “will consist of representatives from enterprises authorized by the two governments.”

The enterprises include the China National Offshore Oil Corporation and the Philippine National Oil Company-Exploration Corporation.

“Any information shared by the two governments or their authorized enterprises under or pursuant to this (MOU) will be kept confidential, unless the two governments decide otherwise,” the MOU stated.

The MOU also said both governments are hoping to agree on the cooperation arrangements within 12 months from the signing of the document.