Power crisis seen looming if China continues to block PHL exploration

THE Philippines’ inability to exploit oil and gas resources in the South China Sea because of interference from fellow territorial claimant China could result in a major power crisis, GlobalSource Partners said.

“If China sustains its bullying, the Reed Bank may never be exploited at all, and with Malampaya natural gas deposits nearly exhausted, the risk of power failures in the Philippines are a great probability,” GlobalSource Partners country analyst Diwa C. Guinigundo said in a brief.

“With power failures, and the probability of rising costs of energy, the gut issue of domestic inflation could resurge,” according to Mr. Guinigundo, a former central bank deputy governor.

The Philippines’ only indigenous source of natural gas, the Malampaya Gas Field off Palawan, is expected to be commercially depleted by 2027. The field’s output helps fuel about 40% of Luzon’s power needs.

The Reed Bank is thought to hold oil and natural gas deposits.

Exploration of the Reed Bank, also known as the Recto Bank, was deferred in 2012 following an order by the late President Benigno S.C. Aquino, III, amid tensions with China.

China claims more than 80% of the South China Sea, including areas identified as part of the Philippine exclusive economic zone (EEZ) by a United Nations-backed tribunal. 

The Recto bank is 120 miles from Palawan, putting it within its 200-mile EEZ.

Former Energy Undersecretary Jose M. Layug, Jr. said natural gas in Recto Bank could exceed the 2.7 trillion cubic feet reserves estimated for Malampaya.

The Philippine Coast Guard recently accused its Chinese counterparts of firing water cannon at Philippine resupply vessels servicing the BRP Sierra Madre, a ship grounded on Ayungin shoal serving as a Philippine outpost.

China is also reportedly undertaking island-building activities near Thitu island, also known as Pag-asa, which is 300 miles from Palawan.

“While the Philippines could once again file for damages including the loss of livelihood of Filipino fishermen with the Arbitration Tribunal and win, the victory could be Pyrrhic unless the judgment is enforced,” he said, citing a suggestion by former Supreme Court senior associate justice Antonio T. Carpio to deduct any arbitral awards from loans extended by China. 

The Philippines must bolster its own defense posture through higher budget allocations, Mr. Guinigundo said.

“With its sovereignty over its own territories ignored, it will require the Philippines to seriously consider strengthening its capacity for self-defense,” he said. — Beatriz Marie D. Cruz