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The Chinese and Philippine foreign ministers sealed an agreement for the two countries to pursue joint oil and gas exploration in the South China Sea, Xinhua reports.
The talks between the two countries on the South China Sea’s oil and gas potential and how to exploit it have been going on for years. An agreement has been difficult to reach, however, mostly because of China’s territorial claims to the basin, which cover nearly the entirety of it.
Even so, earlier this year, the presidents of China and the Philippines reached something of a general agreement that joint exploration for oil and gas in the South China Sea would be a good idea. However, their differences as to how to pursue this remained.
“Both President Duterte and President Xi agreed that while their variant positions will have to remain, their differences however need not derail nor diminish the amity between the two countries,” a spokesman for the Philippines Rodrigo Duterte said after the August meeting, adding that the two had reached an agreement “to manage the South China Sea issue, and to continue to dialogue peacefully in resolving the conflict.”
Dialogue was not always easy to maintain, especially after the Philippines won a court case against China about the South China Sea in 2016. That strained bilateral relations but did not end them, as obviously both China and the Philippines realized the benefits of working together rather than being at odds in a basin the two share with several other countries, all with their own oil and gas ambitions in the South China Sea.
Estimates of how much oil and gas the South China Sea contains vary. A USGS estimate from the mid-90s puts them at 28 billion barrels of crude. China’s CNOOC estimates them at 125 billion barrels of crude and 500 trillion cubic feet of gas, but these figures have not been confirmed by an independent assessor. The one thing that is certain is that there is oil and gas in the South China Sea and it may be enough to fuel regional rivalries and scare tactics like the ones China has deployed against Vietnam.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
In such a situation, conflicting claims can be put aside while the economies of the countries making the claims benefit from the oil and gas wealth estimated by the USGS at 28 billion barrels (bb) of crude while China estimates them at 125 bb of oil and 500 trillion cubic feet of gas.
Most of the times, business precedes political reconciliation or as Great Britain’s legendary leader Winston Churchill used to say” jaw jaw better than war war”.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London