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Ding Gang: Beijing-Philippine fishing deal could foreshadow oil pact


By Ding Gang    Source: Global Times    Published: 2016-11-23


The Sino-Philippine relationship has been smoothly progressing since President Rodrigo Duterte visited China. According to local media outlets, Philippine fishermen are now allowed to fish near Huangyan Island, and Chinese officials from the Ministry of Agriculture have been sent to inspect the location.

The South China Sea disputes between Beijing and Manila concern sovereignty, namely, maritime boundaries, and are closely connected to lives of ordinary fishermen from both sides, who rely on fishing for survival.

Owning more than 7,000 islands, the Philippines is the fifth largest producer of fish, with about 1.61 million people working in the fishing industry. However, Philippine fishermen depend on offshore fishing, and their products are mainly for their domestic market, with only 4.3 percent exported.

Therefore, Philippine fishing boats are usually small-sized with a displacement of less than three tons. As Huangyan Island is only 120 nautical miles away from the Philippines and has abundant aquatic resources, it has attracted many Philippine fishermen. Since Chinese coastguard vessels were stationed near the island to safeguard China`s sovereignty, Philippine fishing had been suspended there.

Now by allowing Philippine fishermen to fish in the region in the spirit of cooperation, the Chinese side has fully considered local people`s basic living requirements and the characteristics of the Philippine economy. This will help ease South China Sea tensions.

The return of Philippine fishermen to the region also marks a good beginning for the next phase of Beijing-Manila joint development. For the Philippine economy, exploring offshore oil resources is much more important than fishing.

Statistics from Bloomberg in 2011 suggest that the South China Sea has a crude oil reserve of 213 billion barrels, exceeding that in Saudi Arabia. The Philippine economy is becoming increasingly dependent on the exploitation of offshore oil and gas, and this is also a significant reason for the South China Sea disputes.

According to the 2009-2030 Power Development Plan released by the Philippine energy department, the country aims to produce 759 million barrels of oil and 2,694 trillion cubic feet of natural gas in 2030, and is expected to approve 117 contracts by then, compared with the current 34. Reaching the goals of this plan requires the 16 oil and gas fields discovered in the South China Sea.

Offshore oil can easily trigger regional tensions, but can also serve as an opportunity for joint development, of which the Malaysia-Thailand Development Area is a typical example.

Several years ago, Philippine Forum Energy PLC said that it would seek joint exploitation of oil with foreign enterprises at Reed Bank, and China was not excluded from the cooperation list. The Philippine energy department also said that it expected China to bid for the joint exploitation.

Philippine statistics suggest that Reed Bank has a reserve of at least 4.67 trillion cubic feet of natural gas, much more than the estimation of 3.4 trillion cubic feet by Count Geophysics in 2006.

However, since China has repeatedly noted its claims of sovereignty in the region, no third country dares take the risk to exploit oil in this field. Beijing-Manila cooperation is the only possible way.

Forum Energy PLC revealed four years ago that it had contacted Chinese oil enterprises about joint development. Although this has not been confirmed by the Chinese side, the warming Sino-Philippine relationship suggests that the two sides are seeing more opportunities for cooperation.

China leads the world in offshore drilling technology, and has sufficient funds to exploit oil. The key issue now is how the two sides can put aside sovereignty disputes and launch negotiations for joint development.

If this becomes reality, China and the Philippines can create a brand-new model for the region to peacefully address sovereignty disputes. Principles established in the process will facilitate China`s peaceful rise.

Perhaps China permitting Filipinos to fish near Huangyan Island is an attempt to explore such a new model.

The author is a senior fellow with the Chongyang Institute for Financial Studies, Renmin University of China.

Key Words: China   Philippine   South China Sea  

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