Friday, March 14, 2008

The ‘Spratly deal’: Facts and figures (3)


(SOURCE: Encyclopedia Britannica Online)

GOTCHA, Published in The Philippine Star on Friday, March 14, 2008

(Continued from Wednesday)

The joint marine seismic understanding (JMSU) allegedly violated the Constitution. Critics point to four broken provisions — on protecting territory and sovereignty, exploration of natural resources, and Senate ratification of international agreements. The breaches are in items of the 2005 RP-China-Vietnam pact:

• “Seismic Work (Article 4) — It is agreed that certain amount of 2D and/or 3D seismic lines shall be reprocessed within the Agreement Term. Seismic work shall be conducted in accordance with the seismic program unanimously approved by the Parties. Interpretation of and evaluation on (sic) data should be done by a joint team created by the Parties either in Beijing or Hanoi or Manila.”

2D or 3D surveys are normal parts of oil or gas exploration. Meaning, the JMSU pertains to exploration for natural resources, which may be done only under stringent constitutional rules. There is no data to interpret or evaluate in the pre-exploratory phase.

• “The Joint Operating Committee (Article 5) — The Parties shall establish a JOC ... three representatives each... Decisions of the JOC shall be made unanimous through consultation... The Parties shall empower the JOC to: ... sign service contracts for seismic acquisition and processing....”

• “Service Contracts (Article 6) — The Parties agree to use CNOOC’s or PetroVietnam’s or PNOC’s affiliates or other parties to process the relevant seismic data in accordance with international bidding procedures. However, preference shall be given to one of the Parties or affiliate whose bid the Parties deem as competitive and reasonable compared with other bids in terms of quality and price for the service required.”

These provisos indicate the pact ceded government’s licensing power to China and Vietnam. The government, under strict constitutional rules, grants service contracts to survey, explore or drill oil and gas only to qualified groups. Based on the map and coordinates, the agreement area of 142,886 sq km covers not only the Spratlys but also the continental shelf of Palawan (Gotcha, 10 Mar. 2008).

• “Negotiation Term (Article 8) — In the event Parties elect to enter into negotiations for signing a more definitive agreement for further cooperation covering all or part of the Agreement Area prior to or at the expiration of the Agreement Term, such negotiations shall take place during the Agreement Term or during the period of 90 days following the date of expiration. The Negotiation Term shall be reserved for the sole purpose of negotiations among CNOOC, PetroVietnam and PNOC. During such Negotiation Term, unless otherwise agreed by the Parties, no party shall have the right to negotiate an agreement for a marine seismic undertaking or any other agreement(s) with any other party with respect to all or part of the Agreement Area.”

Since the pact covers Palawan’s continental shelf, this proviso bars government from licensing private firms to extract oil or gas in RP territory. This is the complaint of Forum Energy Philippines, which is ready to drill in its 2002 seismic-exploration area in the Reed Bank with deposits bigger than Shell’s Malampaya 150 km away. In effect, the government during the agreement period forfeited potential state income from oil and gas mining.

• “Assignment (Article 9) — CNOOC shall assign all its rights to and obligations under the Agreement to affiliate CNOOC China Limited, PetroVietnam to PetroVietnam Investment and Development Co., and PNOC to PNOC-Exploration Corp.... No Party shall assign all or part of its rights and obligations under the Agreement to any other parties without prior written consent of the rest of the Parties.”

Invoking this proviso, China resists the awarding of a drilling license to Forum Energy.

• “Confidentiality of Information (Article 10) — This Agreement and all relevant documents, information, data and reports with respect to the JMSU shall be kept confidential during the Agreement Term and within five years after its expiration and shall not be disclosed by a Party to any other party without the written consent of the rest of the Parties.”

No wonder Malacañang kept mum since the pact signing in Mar. 2005. This despite a constitutional provision (National Economy and Patrimony) that requires the President to report any exploration deals to Congress within 30 days of implementation (Gotcha, 12 Mar. 2008).

• “Miscellaneous Provisions (Article 11) — All data and information acquired for the fulfillment of the Seismic Work and their interpretation shall be jointly owned by the Parties. In the event any Party wishes to sell or disclose the above-mentioned data and information after the expiration of the confidentiality term, prior written consent shall be obtained from the rest of the Parties.”

What if China refuses to grant that written consent? How will RP use the seismic data on its own continental shelf for its own benefit?

Weeks after the pact signing, China promised RP $2 billion in loans per year till 2010. From the loans came at least 20-percent kickbacks. The contract for the $330-million national broadband network contained 60-percent kickback of $200 million.

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E-mail: jariusbondoc@workmail.com