Philippines’ Duterte says Xi offering gas deal if arbitration case ignored

Philippine President Rodrigo Duterte has acknowledged he’s short of solutions for having China adhere to Manila’s arbitration victory in their South China Sea disputes. (File/AP)
Updated 11 September 2019

Philippines’ Duterte says Xi offering gas deal if arbitration case ignored

  • If Duterte ignores the Permanent Court of Arbitration’s 2016 ruling, China would agree to be the junior partner in a joint venture to develop gas deposits at the Reed Bank
  • The tribunal in The Hague clarified maritime boundaries and the Philippines’ sovereign entitlements

MANILA: Philippine President Rodrigo Duterte said his Chinese counterpart has offered Manila a controlling stake in a joint energy venture in the South China Sea, if it sets aside an international arbitral award that went against Beijing.
Duterte said Chinese President Xi Jinping told him during their recent meeting that if he ignored the Permanent Court of Arbitration’s 2016 ruling, China would agree to be the junior partner in a joint venture to develop gas deposits at the Reed Bank, located within Manila’s Exclusive Economic Zone (EEZ).
“Set aside the arbitral ruling,” Duterte was quoted as telling reporters late Tuesday in remarks provided by his office on Wednesday.
“Set aside your claim,” he said, quoting Xi. “Then allow everybody connected with the Chinese companies. They want to explore. If there is something, they said, we will be gracious enough to give you 60%, only 40% will be theirs. That is the promise of Xi Jinping.”
China’s foreign ministry and its embassy in Manila did not immediately respond to requests for comment on Duterte’s remarks.
The tribunal in The Hague clarified maritime boundaries and the Philippines’ sovereign entitlements, and in doing so, invalidated China’s claims to almost the entire South China Sea. China does not recognize the ruling.
Duterte has sought to befriend Xi, hoping to secure billions of dollars of investment, avoiding challenging China over its activities in the South China Sea, including its militarised artificial islands.
Big setback
Any agreement to forget the arbitral award and team up with China would be a major setback to other claimants, especially Vietnam and Malaysia, which like the Philippines have experienced repeated challenges from China’s coast guard inside their EEZs.
The United States has called that bullying and coercion aimed at denying rivals’ access to their energy assets.
Duterte did not say if he had agreed to Xi’s offer, but said the part of the arbitral award that referred to the EEZ “we will ignore to come up with an economic activity.”
The tribunal said the Philippines had legal rights to exploit gas deposits that China also claims at the Reed Bank, about 85 miles (140km) off the Philippine coast.
The Philippines only accessible gas resources at the Malampaya fields are set to run out by 2024.
A joint project with China has been talked about for decades, but has gone nowhere because of their competing claims. Joint activity could be deemed as legitimising the other side’s claim, or even relinquishing sovereign rights.
Philippine Foreign Secretary Teodoro Locsin on Wednesday told news channel ANC that a preliminary agreement between China and the Philippines would avoid stating which country was entitled to the gas.
“It’s very clear — no legal position is compromised if we enter into this agreement,” Locsin said, adding that putting aside the arbitration case was immaterial, because an international court had already made its decision.
“It’s final and binding,” he added.


Oil up on slowing pace of coronavirus, Venezuela sanctions

Updated 20 February 2020

Oil up on slowing pace of coronavirus, Venezuela sanctions

  • Financial analysts say epidemic is likely to deal a ‘short-term blow’ to global economy

LONDON: Benchmark Brent oil prices rose for a seventh consecutive day after demand worries eased with a slowing of new coronavirus cases in China and supply was curtailed by a US move to cut more Venezuelan crude from the market.

Brent was up 71 cents at $58.46 a barrel at 1510 GMT. The global benchmark has risen nearly 10 percent since falling last week to its lowest this year. US oil was up 53 cents at $52.58 a barrel.

“Those in doubt of the economic impact from the virus should take heed from Apple’s surprise sales warning ... Put simply, this is the surest sign yet of the coronavirus fallout on the global economy,” said PVM analysts in a note.

S&P Global Ratings said it expected coronavirus would deliver a “short-term blow” to economic growth in China in the first quarter, echoing findings by the International Energy Agency.

Official data showed new cases in China fell for a second straight day, although the World Health Organization said there was not enough data to know if the epidemic was being contained.

The oil market price structure is also showing signs that prompt demand for oil is picking up, as the front-month Brent futures market is moving deeper into backwardation, when near-term prices are higher than later-dated prices.

This week, oil prices were also buoyed by a US decision to blacklist a trading subsidiary of Russia’s Rosneft, which President Donald Trump’s administration said provided a financial lifeline to Venezuela’s government.

Hopes that the Organization of the Petroleum Exporting Countries (OPEC) and allied producers would deepen supply cuts also supported prices.

The grouping, known as OPEC+, has been withholding supply to support prices and meets next month to decide a response to the downturn in demand resulting from the coronavirus epidemic.

But in the US, which is not party to any supply cut agreements, oil production has been rising. US shale production is expected to rise to a record 9.2 million barrels a day next month, the Energy Information Administration said.