Manila's oil search could incite conflicts

Manila's oil search could incite conflicts

By Martin Abbugao

MANILA (AFP): The Philippines' frenzied search for oil has led it into potentially dangerous waters with the grant of an exploration contract around the disputed Spratly islands, analysts said here Tuesday.

Philippine officials in May gave the green light to Alcorn Petroleum and Minerals Corp. and U.S. partner Vaalco Energy Inc. of Houston, to begin preliminary exploration work on the Reed Bank, an undersea structure near the South China Sea chain.

The six-month, non-exclusive contract includes "research and library work" on aeromagnetic surveys and other data held by the Department of Energy.

Philippine energy officials insist the area where the exploration would be conducted is not part of the Spratlys -- a chain of atolls in the South China Sea claimed wholly by China and in part by Brunei, Malaysia, the Philippines, Taiwan and Vietnam.

The Spratlys are believed to sit atop vast deposits of oil and natural gas and also straddle strategic sea lanes. All claimants but Brunei have stationed troops on islets in the chain.

Analysts say Manila's recent move would strengthen its sovereignty over islets, reefs and atolls it has garrisoned, but could also have a political and diplomatic impact on efforts to peacefully resolve the territorial dispute and suggestions for joint development of the area.

"It's a response to what the Chinese and Malaysians are doing," Julius Cesar Parrenas, director of the International Institute for Strategic Studies, told AFP.

He was referring to Beijing's granting of a contract to the U.S.-based Crestone Energy Corp. to explore for oil in the area, prompting vehement protests from Vietnam. Malaysia has also embarked on a project to develop a resort in the Spratlys.

"One means of strengthening sovereignty is by already having activity there, such as a contract of government or development plans," he said, adding that exploration was a good move by the Philippines.

Noel Morada, an analyst with the Institute for Strategic and Development Studies, said what is crucial to the Philippines' move is the reaction of China and Vietnam.

"Since we are taking this particular action, we should be prepared of the possible consequences," he said. "This is an economic move which has political implications."

Energy Secretary Delfin Lazaro and Undersecretary Rufino Bomasang on Tuesday sought to forestall trouble by insisting the permit granted to Alcorn was limited to the Reed Bank and did not include areas in the Spratlys.

The Reed Bank is an underwater structure between the Philippine island of Palawan and most of the Spratlys.

Lazaro and Bomasang said Manila had done exploratory drilling there in the 1970s, which had not been disputed by other claimants, adding that political and diplomatic repercussions had been considered before the permit was granted.

Alcorn said in a statement the research permit only covered the Reed Bank and excluded the disputed areas of the Spratlys.

But the statement said the area of coverage also includes Patag and Lawak islands -- two of the eight small islands and reefs garrisoned by Philippine marines and collectively referred to by Manila as the Kalayaan (Freedom) group.

The group was annexed in a presidential decree by the late dictator Ferdinand Marcos.

The Philippines has become an attractive site for oil exploration with news of recent oil strikes off Palawan, confirming the country's potential. It has programmed 18 wells for drilling this year, many in frontier areas.