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PH-China oil venture legal – maritime expert

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By Roy C. Mabasa

The proposed joint oil exploration between the Philippines and China in Palawan that is now awaiting President Duterte’s signature is within the bounds of law since it cannot be classified as a joint development (JD), an academic and maritime expert said.

Dr. Jay Batongbacal of the University of the Philippines’ (UP’s) Institute for Maritime Affairs and Law of the Sea (IMLOS) was referring to Service Contract (SC) 57 in offshore Calamian northwest of Palawan that covers an area “outside of China’s 9-dashed lines/historic rights claim area.”

The China National Offshore Oil Corporation (CNOOC), the third-largest national oil company in the People’s Republic of China, has a 51 percent stake in SC 57.

“In the WPS (West Philippine Sea), China’s claim has already been declared by an international tribunal to be invalid, and hence, the fundamental condition for JD (overlapping legitimate claims) is absent,” Batongbacal said in an interview conducted recently by political analyst and Manila Bulletin columnist Richard Heydarian.

In its July 12, 2016 ruling, the International Arbitral Tribunal in The Hague declared that the Philippines has exclusive sovereign rights over the WPS and that China’s “9-dash line” doesn’t hold water.

“There is therefore no dispute that it is within the Philippines’ jurisdiction, whether Exclusive Economic Zone (fisheries resources) or Continental Shelf (petroleum resources),” he said, referring to the WPS.

Manila sought arbitration proceedings against Beijing in 2013 during the previous Aquino administration, it can be recalled.

Batongbacal explained that a joint development elsewhere in the world has always been justified and used to address disputes, noting that in those cases, “the disputes were ‘legitimate’ in the sense that both sides could legally claim EEZ/CS unilaterally, but their claims overlapped.”

The UP maritime law expert further said SC 57 should be seen from a perspective no different from the previous SC 38, or the Camago-Malampaya project, located further south of SC 57.

On the legality of the project, Batongbacal said CNOOC’s purchase of 51 percent of a stake in SC 57 is allowed under current law, in the same way that Shell and Chevron were allowed to purchase 45 percent each of the Camago-Malampaya Project.

“CNOOC’s purchase of a stake (called “farming in”) in SC 57 is not a case of joint development. It is unilateral development by the Philippines, but with CNOOC basically acting as a sub-contractor,” he explained.

At present, Batongbacal said there is nothing inherently unconstitutional or illegal in CNOOC’s buying a stake in a service contract for an area that is not disputed “whether they be located on land, or, alternatively, at sea.”

He, however, warned that a JD agreement by the Philippines with China “will not be consistent with the Award [or] with United Nations Convention on the Law of the Sea (UNCLOS).

“It can only be justified as a purely political accommodation, not a legally-warranted arrangement. However, if the Philippines makes the political accommodation, it can contradict its legal position as affirmed by the arbitration,” he said.

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