Carpio: PH signed terms of reference on joint oil and gas exploration deal with China

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Metro Manila (CNN Philippines, August 25) — Foreign Secretary Teodoro Locsin has signed the terms of reference on a 2018 memorandum of understanding (MOU) on cooperation on oil and gas development between China and the Philippines, according to Senior Associate Justice Antonio Carpio.

Speaking at a forum in Davao City last Friday, he said Locsin signed the document which would implement the MOU three weeks ago.

“So we have now two documents and I think the President will go to Beijing and there could be an exchange of a list of names who will be members of the steering committee and the working committee,” he told the forum.

Carpio did not provide details of the terms of reference.

President Rodrigo Duterte is scheduled to hold talks with Chinese President Xi Jin Ping next week when he flies to Beijing on a working visit. During their meeting, the President said he would raise the controversial arbitral ruling on the case on the maritime dispute in the South China Sea which favored the Philippines, the MOU, and other bilateral issues.

Under the MOU, signed during Xi’s state visit in November last year, the two countries agreed to accelerate arrangements for joint exploration in maritime areas in accordance with international law.

The MOU creating the framework for these deals was first revealed exclusively to CNN Philippines by Locsin.

The MOU calls for the creation of working groups that would negotiate the terms of projects in specific areas to be approved by a "joint intergovernmental steering committee" headed by the foreign ministries of both countries.

Each working group would agree on the “inter-entrepreneurial technical and commercial arrangements” for its area of exploration. It was agreed that the Philippines would assign the company that had a service contract with the government to a particular working group, while China authorized the China National Offshore Oil Corporation to represent Beijing in all of them.

Carpio said all service contracts for exploration projects signed by the government require a 60-40 sharing of the resources as required by the Constitution.

One important service contract is in the Reed Bank with Forum Energy. The project has been on hold for several years because of a presidential order freezing all exploration activities in disputed areas. Prior to this, a Chinese ship had ordered a Forum vessel to stop drilling in the Reed Bank which is also claimed by Beijing.

Should there be an exchange of names in Beijing next week, Carpio said there would already be three documents on joint exploration. If a working group would cover the service contract in Reed Bank, Carpio said it could pave the way for a peaceful resolution of the overlapping maritime, but not the territorial, claims of the two countries in the South China Sea.

"Despite everything,” Carpio said Duterte “might be the president who will find a solution to the South China Sea dispute.”