China-Philippines joint energy plans may soon go ahead

Subject

The possibility of joint China-Philippines exploitation of hydrocarbons in disputed waters in the South China Sea.

Significance

Recent months have seen a succession of signs of a possible breakthrough in China-Philippines offshore energy cooperation. The Philippine foreign secretary has suggested the two countries may shortly reach an agreement to exploit hydrocarbon resources in a disputed area of the South China Sea. The deal would involve a 60:40 revenue-sharing arrangement in favour of the Philippines.

Impacts

• Many Philippine politicians will support the deal because the country needs a replacement for the rapidly depleting Malampaya gas field.
• Even a carefully drafted arrangement may still face constitutional challenges within the Philippines.
• Both countries would benefit from greater energy security.