MANILA, Philippines – President Rodrigo Duterte has opened the door for a Russian firm to explore for oil and gas in Philippine waters being claimed by China.

Duterte invited Russian oil giant Rosneft to conduct oil and gas exploration in various parts of the Philippines, including the West Philippine Sea, which Beijing continues to claim through its 9-dash line – a claim invalidated by the Permanent Court of Arbitration in 2016.

Energy Secretary Alfonso Cusi told Rappler that Duterte extended the invitation during his October 2 meeting with Rosneft CEO Igor Sechin in Moscow, Russia. 

“PRRD (President Rodrigo Roa Duterte) extended invitation to Rosneft to do exploration in the Philippines,” Cusi said on Wednesday, October 9 in a message to Rappler. 

Rosneft was asked to apply for a service contract with the Department of Energy, which Cusi heads.

Areas in the West Philippine Sea were offered as possible exploration areas, apart from 14 areas in different parts of the country that have been previously offered as options for other firms.

“The 14 pre-determined areas are all within Philippine sovereign territory. We also mention the available areas at WPS (West Philippine Sea) which they can nominate to explore. Invitation of PRRD covers all,” said Cusi.

Why does this matter? Russian involvement in the West Philippine Sea is seen as a possible game-changer, given the northern country’s good ties with China which is claiming the area as its own.

Russian companies, including Rosneft, are already helping Vietnam explore for oil and gas in waters within its exclusive economic zone but also being claimed by China. 

Beijing has issued warnings against such operations as a way to assert its claim to the area. Despite these warnings, however, Russian firms have not abandoned the projects.

Russia, unlike China, is not claiming sovereign rights over the South China Sea and its companies are willing to explore for natural resources as contractors of states with such rights.

Awarding service contracts to firms would not violate the Philippine Constitution since these deals explicitly state the areas involved are covered by Philippine sovereignty or sovereign rights. The companies would be coming in as mere service contractors to the government.

The Duterte government awarded such a contract to Israeli firm Ratio Petroleum Ltd in October 2018.

How about Duterte’s deal with China? Meanwhile, the Duterte government is pursuing a memorandum of understanding  with China on joint oil and gas exploration in the West Philippine Sea. 

The two governments have already formed committees  tasked to draft contracts covering specific areas. State corporations from both countries have been designated as default implementors of such contracts.

But experts and critics have urged caution in pursuing such deals given China’s refusal to recognize Philippine sovereign rights over the West Philippine Sea.

Observers were further alarmed when Duterte, fresh from a trip to China, said his government is “ignoring” the Hague ruling which affirmed Philippine rights in order to pursue oil and gas deals with China.

The West Philippine Sea reportedly contains rich reserves of oil and gas, including Recto Bank (Reed Bank). Exploration here is covered by Service Contract No 72, which had been awarded to Forum Energy PIc, a firm led by Filipino businessman Manuel Pangilinan’s Philex Petroleum Corporation.

According to previous reports, the firm was initially in talks with Chinese state-run firm CNOOC (China National Offshore Oil Corporation) on developing the area’s energy reserves. – Rappler.com