The Philippines may renew China oil talks as war in the Middle East threatens supplies

By Adrian H. Halili, A reporter

Joint oil inspections between the Philippines and China may be renewed, a Manila embassy official said Wednesday, as a conflict involving Iran threatens global oil supplies and encourages the Southeast Asian country to expand its energy options.

Foreign Affairs Secretary Maria Theresa P. Lazaro said talks with Beijing have not yet begun, but could follow as the government reassesses the risk of supply from the Middle East.

“Not at this time, but I think it’s possible,” he told reporters when asked if negotiations had begun.

President Ferdinand R. Marcos, Jr. he previously said he was ready to resume talks with China about possible joint oil and gas exploration in the Reed Bank, a resource-rich area in the South China Sea also claimed by Beijing.

In an interview with Bloomberg, Mr. Marcos said the war in the Middle East could provide an “impulse” for renewed talks.

He and Chinese President Xi Jinping agreed in 2023 to restart talks on joint energy development in the disputed waters after earlier efforts collapsed due to legal and sovereignty concerns.

“It doesn’t start,” said Ms. Lazaro. “There have been many discussions in the past about oil and gas exploration. However, there have been misunderstandings about the finer points.”

In 2005, the Philippine Supreme Court overturned a joint earthquake survey agreement involving China and Vietnam, ruling that it was unconstitutional by allowing foreign entities access to the country’s natural resources.

Talks resurfaced again in 2018 under the Duterte administration on a cooperation agreement with China, but the agreement was later terminated due to constitutional and sovereignty issues.

“If it ever comes to negotiations, we will see how they are resolved,” said Ms. Lazaro, adding that the negotiators are aware of the mistakes that disrupted previous negotiations.

Relations between Manila and Beijing have deteriorated in recent years amid repeated disputes in the South China Sea, where China continues to assert growing maritime claims.

The Philippines has consistently denied those allegations, citing a 2016 ruling by the High Court of Arbitration in The Hague that invalidated China’s position under international law.

Beyond China, Ms. Lazaro said Manila is also looking at other ways to protect fuel supply, including efforts to ease restrictions on Russian oil.

The Philippine embassy in Washington was working with the US State Department to get relief from sanctions imposed on energy exports to Russia, he said.

“We are asking the US State Department to lift the sanctions against Russia so that we can buy oil and meet our other energy needs,” said Ms. Lazaro, adding that no response has yet been received.

The Department of Foreign Affairs assists other agencies, particularly the Department of Energy, in identifying alternative sources of oil and forwarding requests through diplomatic channels.

The Philippines has been struggling to ensure fuel supply as the war involving Iran disrupts global oil trade. The country has 45 days worth of oil, according to the energy ministry.

The Strait of Hormuz, which carries about a fifth of the world’s oil exports, is closed due to Iran’s blockade, adding to supply pressure.

Ms. Lazaro said the Iran war is expected to be a focus of discussion at the upcoming Association of Southeast Asian Nations (ASEAN) Summit, as the bloc pushes to finalize a long-standing code of conduct in the South China Sea.

“War will be a big issue, but the South China Sea will always be part of the agenda,” he said. Meetings are scheduled later this year in Cebu and Manila.

He added that ASEAN remains hopeful that the conflict will not derail the progress of the code of conduct, which aims to manage disputes in the vital waterway that handles billions of dollars in annual trade.

“What stands out is that the code of conduct is being worked on, I hope it will be completed by the end of the year,” said Ms. Lazaro.

‘FOOD’ HELP
Meanwhile, Senator Maria Imelda “Imee” R. Marcos urged the government to increase negotiations with other countries to find other sources of fuel, following the declaration of a national energy emergency.

He urged the administration to communicate strongly with regional and global partners to ensure stable fuel procurement.

“The Philippines must negotiate with its ASEAN neighbors such as Malaysia, Brunei, Vietnam and Thailand to obtain imported crude oil,” he said in a statement.

He also added that the government should contact Indonesia, Australia, China and India to strengthen domestic fuel supply.

Mrs. Marcos urged the authorities to consolidate the Philippine National Oil Co. to pursue long-term strategies that can mitigate the impact of future energy shocks. He also asked the administration to disclose the actual levels of fuel supplies in the country.

Earlier, the President declared a national energy emergency, citing the threat posed by the conflict in the Middle East to the Philippines’ oil supply.

Mrs. Marcos cited measures taken by other countries, saying that Myanmar implemented fuel rationing, vehicle coding and increased duty from domestic arrangements, while Vietnam reinstated the Fuel Price Stabilization Fund.

“Does the government really have a plan, or will it continue to distribute decreasing prices [aid] choosing fields?” Mrs. Marcos asked, warning that the subsidy may not be enough as fuel prices rise.