Philippines-China oil talks gain traction; Manila can’t afford drilling alone

The proposal to revive the stalled Philippine-China joint oil and gas exploration in the South China Sea is gaining traction among lawmakers amid concerns over a potential oil supply shortage.

Senate President Vicente “Tito” Sotto III said the idea of joint exploration with China had been raised as early as the administration of former President Rodrigo Duterte but failed to materialize.

Sotto said the proposal could be reconsidered under the current administration, especially as the country seeks alternative energy sources beyond the Middle East, which supplies the bulk of Philippine oil imports.

However, progress has been stalled by ongoing territorial disputes in the West Philippine Sea, with President Ferdinand Marcos Jr. acknowledging that tensions with Beijing have hampered negotiations.

Energy expert and former undersecretary Jose Layug Jr. said regional cooperation is necessary, noting that the Philippines cannot shoulder the high cost of exploration alone, which can reach up to $100 million per well.

“That's why our policy in the Philippines, based on PD 87, is to invite foreign companies to come here and carry out the exploration without any expense to the government,” Layug said.

Layug noted that the West Philippine Sea holds significant natural gas reserves, which could help meet the country’s electricity needs, although extraction could take up to 10 years.

Senator Panfilo Lacson also expressed support for revisiting the deal, provided it complies with the Constitution’s 60-40 revenue-sharing rule.

Despite openness from both sides, the proposal faces legal hurdles. In 2023, the Supreme Court declared a similar arrangement unconstitutional, citing violations of provisions requiring full state control over natural resources.

China has signaled willingness to resume talks, with its embassy in Manila saying cooperation remains possible if the Philippines demonstrates “sincerity.”