DFA: Draft PH-China oil exploration deal out by September

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Metro Manila (CNN Philippines, July 31) — The draft framework for the planned joint exploration by the Philippines and China for oil and gas in the West Philippine Sea is expected to be out by September, Foreign Affairs Secretary Alan Peter Cayetano said Tuesday.

"No formal exchange of draft yet, but hopefully this August, latest September, we'll be at that stage when we can exchange drafts," Cayetano said during a press briefing before leaving for Singapore, where he will be attending a conference of Southeast Asian foreign ministers.

Cayetano said the two countries have already listed principles to be included in the framework, and are looking at the draft agreement "line by line."

After they finish the draft, Cayetano said, they will sit down with the Department of Energy (DOE) and the London-listed Forum Energy Plc, to see if there are provisions to be further ironed out.

Forum Energy earlier obtained a contract to drill wells in the disputed Reed Bank. Businessman Manny Pangilinan's PXP Energy Corp. has controlling interest in the company.

"We will not say yes unless it's as good as, or better than the Malampaya," Cayetano said.

Under Service Contact 38 of the DOE, the Philippine government and the Malampaya consortium have a 60-40 sharing of revenues for the gas deposits off the shore of Palawan.

Cayetano said a joint exploration between two countries is very much doable. 

"We just don't want to do it in a way that will damage any of future entitlements or claims, and number two, we have to make sure that it passes the scrutiny of the Supreme Court," he said.

"We're rushing it cause Filipinos only have a one-term six-year presidency, and if you want to get it done the best time to do it is within your first four years," he added.

The territorial dispute with China in the South China Sea has put on hold attempts at oil exploration, particularly in the Reed Bank, with the Philippine government issuing a moratorium in 2014.

In 2011, Chinese patrol vessels almost rammed a Forum Energy contracted survey ship at the Reed Bank.

A Hague-based international arbitral tribunal ruling in 2016, which China refused to recognize, affirmed Philippine sovereign rights in its 200 nautical mile exclusive economic zone, including the Reed Bank, which is 85 nautical miles off Palawan's coast.

On the code of conduct in the South China Sea

Another deal between China and the Association of South East Asian Nations (ASEAN) is being eyed to be out by October.

The Philippines is the country coordinator in negotiations between China and the ASEAN for a legally binding code of conduct (COC) to identify what claimant countries can and cannot do in the disputed waters of the South China Sea.

China claims nearly the entire sea, while Brunei, Malaysia, Taiwan, Indonesia, the Philippines and Vietnam also have claims in the area.

"The hope is that by November when our leaders meet, we will have it. But of course with Singapore as chairman and many of the members work, medyo [slightly] mitigate your expectations," Cayetano said.

China and the ASEAN already signed in 2002 a Declaration on the COC of Parties in the South China Sea, but they have yet to agree on its implementation. Last year, the COC's draft was completed.

However, Cayetano claimed rules may be coordinated among countries regarding actions in the South China Sea.

"You don't have to wait for the code-of-conduct (COC) to start implementing some of the things that you want in the COC," it said.

China has drawn flak for building artificial islands and military structures in the South China Sea, as well as for tensions with Filipino fishermen in June.