China’s Oil Tenders Heightening Tensions

While the Philippine government encourages oil exploration contracts in the West Philippine Sea, Malacañang frowns on China's plan to launch its first major tender of oil blocks in the disputed territory.

Secretary Ramon Carandang of the Presidential Communications Development and Strategic Planning Office (PCDSPO) reminded China to avoid taking actions that would heighten the territorial conflict in the wake of reports the Asian giant intends to invite oil firms to bid on oil projects in the contested area.

Carandang said they hope China would follow the code of conduct among claimant nations to prevent escalation of the sea dispute.

"If they are in areas that are disputed like the Kalayaan Group of Islands where there are other claimants like the Philippines, Malaysia, Taiwan and Vietnam then I understand that the code of conduct, while it is not binding, the spirit of it is that countries will not take any efforts to increase tensions," Carandang said in a Palace press briefing.

"We would remind our friends, not just China, that in the spirit of the code of conduct, it might be better not to take actions that would raise tensions," he said.

China reportedly plans to launch its first major tender of oil exploration projects in the disputed waters of South China Sea. The state-run China National Offshore Oil Corp. (CNOOC) has invited energy firms to bid on the oil blocks in the disputed territory.

At present, Carandang said they are not aware which parts of the disputed territory China plans to bid out to energy firms.

While it issued a reminder to China to reduce tension in the disputed territory, the Philippine government will continue to accept oil exploration contracts in the West Philippine Sea.

Carandang said they don't see any problem with the oil exploration projects because these are located within the country's territory. The Department of Energy recently accepted four bids for three oil and one gas exploration projects in the area.

"We are bidding out areas for exploration within the Philippine territory. This is not part of what is generally considered disputed territory. It is not part of the Spratlys Island, not part of Kalayaan Island. This is part of the Philippine territory," he said.

He also assured that energy firms involved in the projects will be given ample security by the government.

"We will exercise our right as a sovereign country to bid out licenses. If those people who have licenses need protection, we will provide it to the best of our ability," he said.

He said the Philippines has been issuing service contracts in the last four decades and "there have never been issues in the past with regard to the issues that we face now."

He said there are regular sea patrols conducted by the Philippine Navy and the Coast Guard to ensure the protection of energy investors in the area.

Southeast Asian nations have agreed on a Code of Conduct in the West Philippine Sea and now plans to ask China to adopt the legally binding document. China claims all of the South China Sea, believed to be rich in oil and gas deposits, while the Philippines and other neighbors claim ownership of some of the islands.