Oil contracts legal, PH tells investors

By Mia M. Gonzalez and Estrella Torres, BusinessMirror

Posted at Jul 16 2012 08:10 AM | Updated as of Jul 16 2012 10:19 PM

MANILA, Philippines - Malacañang assured potential investors of the legality of oil-exploration contracts to be offered by the Philippines in the South China Sea, amid China’s claim that these agreements are illegal.

Its deputy spokesman, Abigail Valte, said in an interview with state-run Radyo ng Bayan on Sunday that Manila will continue to offer the oil-exploration contracts off Palawan province in western Philippines despite objections from Beijing.

When asked if the government can assure investors of the legality of the agreements if they make a winning bid for one in three areas or blocs in the South China Sea, Valte replied, “Yes, of course. Certainly.”

On China’s warning that the Philippines cannot bid out such contracts without its permission, the Palace spokesman said it would not be the first time for the government to offer such contracts and there were no objections to its move in the past.

“The Philippine government has been offering exploration contracts in Recto Bank [Reed Bank in international maps] in the West Philippine Sea [South China Sea] since the 1970s and nobody protested it. We will continue to do so,” Valte added.

The Department of Energy earlier announced that it will bid out oil-exploration contracts in three blocs off the coast of Palawan, and that these areas belong to the Philippines as they lie within the country’s exclusive economic zone.

When also asked about a Chinese frigate that ran aground on Half Moon Shoal in the South China Sea but was refloated and retrieved later on, Valte said the Department of Foreign Affairs (DFA) will inquire into the circumstances surrounding the incident. She, however, added that Foreign Secretary Albert del Rosario was not keen on seeking an explanation from the Chinese government, for now.

She added that Malacañang is pleased with the successful retrieval and refloating operations, as there were no reported casualties.

The government also stood firm against supporting a step taken by a group of Filipinos in the United States to lead a worldwide protest against China by boycotting Chinese products.

“We are [also] not inclined to do the same or to call for a similar action,” Valte said.

Malacañang expressed disappointment also on Sunday over non-issuance of a joint statement at the end of a meeting of foreign ministers of the Association of Southeast Asian Nations (Asean) in Cambodia.

Valte said also in the Radyo ng Bayan interview that despite the apparent setback, the Philippines will continue to work with fellow member-countries in the Asean on a Code of Conduct in the South China Sea. Asean also groups Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand and Indonesia.

“We express disappointment at the fact that…in the 45-year history of the Asean, it’s the first time that they were not able to come [up] with a communiqué on this issue. That is the only thing that we have to add, apart from statements that were made by Secretary del Rosario,” the Palace deputy spokesman added.

Del Rosario had deplored the non-issuance of a joint communiqué and attributed this to the objection of Cambodia, the Asean chairman, to the inclusion of the discussion on Scarborough Shoal in the document. The shoal, hotly contested by Manila and Beijing, had caused a prolonged standoff between the Philippines and China that began in April.

Still, Valte said, the Philippines “will continue to work with the Asean member-countries on the Code of Conduct [COC] and, hopefully, we will be able to hammer out some of the contentious issues that were discussed in past [Asean] forums.”

In Phnom Penh, where the Asean foreign ministers met, the regional bloc’s secretary-general said the division among the member-countries in dealing with the Scarborough Shoal dispute makes the proposed Code of Conduct more essential to avert deepening conflict and military intrusions in the region.

Dr. Surin Pitsuwan said also on Sunday that the Asean “needs to do some soul-searching on how we will work together inside and outside the region.”

He added that the non-issuance of a joint communiqué is a mere “hiccup and a pause” but not a failure for the 10 Asean economies that are seeking to establish a single market by 2015.

During the Phnom Penh meeting, Japan, a dialogue partner of the regional bloc, protested China’s reported intrusions into some disputed islands in the Pacific Ocean that the two countries are claiming.

In pushing for the Code of Conduct, Surin said, “We need to assess the situation very carefully, obviously we need the COC more than ever, we need a new body of norms [that] is regime-based. We need to put together our own COC with a sense of sanctity, ownership and commitment and regionally focused.”

At a meeting between Asean and the European Union also on Sunday, the United Kingdom and EU acceded to Asean’s Treaty of Amity and Cooperation, a binding agreement that prevents signatories from engaging in aggression that would impact on peace and stability in Southeast Asia.

According to British Foreign Secretary William Hague, Britain’s accession to the treaty emphasizes his government’s commitment to help peaceful engagement in the Asean.

The proposed Code of Conduct between Asean and China seeks to ease tensions in the South China Sea. The code is a step forward from the Declaration of Conduct of Parties in the South China Sea signed in November 2002 between the two parties. The declaration did not include sanctions and did not have enough mechanisms to prevent parties from engaging in military activities in the disputed territories in the South China Sea.

Tensions in the disputed waters seemed to have ebbed after Chinese Navy ships safely removed one of the country’s warships from Half Moon Shoal off Palawan where it had run aground while on a security patrol and sparked fears of another maritime standoff in the South China Sea.

The frigate will sail back to port with minor damage, and no crew was injured, Chinese Embassy spokesman Zhang Hua said in a statement that suggested the vessel did not spill any oil.

It got stuck on Wednesday night on the shoal, about 110 kilometers (70 miles) from Palawan, prompting the Philippines and China to send rescue ships there.

The shoal where the warship ran aground is called Hasa Hasa by the Philippines and claimed by China as part of the Nansha island chain, known internationally as the Spratlys. The Spratly Islands are a major cluster of potentially oil- and gas-rich islands and reefs long disputed by China, the Philippines, Taiwan, Malaysia, Vietnam and Brunei Darussalam.

The Philippines has withdrawn its ships from Scarborough Shoal to ease the tensions but Chinese government surveillance ships have remained in the area.