Energy investors wary of West Philippine Sea tensions - DOE

Metro Manila, Philippines - Escalating tensions in the West Philippine Sea (WPS) have discouraged potential foreign investors from engaging in the offshore energy sector, especially in contested areas, Energy Secretary Sharon Garin said.

Speaking during a press briefing on Tuesday, July 15, Garin admitted that the dispute with China over parts of the West Philippine Sea, particularly those within the so-called nine-dash line - an imaginary area covering most of the South China Sea that China claims as its historical right - has made the area risky for exploration.

“No investor will risk millions or billions of pesos when they are not sure kung secure sila [if they are secure],” she said.

She noted that even the Malampaya gas field in the contested area requires tight security coordination between the Philippine Coast Guard and the Department of National Defense to protect operations.

“Even Malampaya which [is] way within the nine-dash line, binabantayan din iyan po ng ating mga coast guard,” she added.

[Translation: Even Malampaya, which lies well within the nine-dash line, is guarded by our coast guard.]

Garin said investors are particularly hesitant when projects fall within disputed waters, including an area near Reed Bank, which remains untapped despite its high potential.

“Mayroon kaming isang project na Service Contract 72… they are still figuring out. It has good potential, pero hindi pa sila maka-decide kung paano nila umpisahan,” she explained.

[Translation: We have a project under Service Contract 72. It has great potential, but the investors still can’t decide how to begin.]

Certainty sought

Garin said her agency has awarded three new service contracts under the Marcos administration and is reviewing eight more, including the world’s first hydrogen contracts and the first oil and gas contracts, in the Bangsamoro Autonomous Region in Muslim Mindanao.

“That’s what the government needs to do… if we want energy security, then we need more drilling,” she said.

“I think the president is not just concerned with your energy needs today or until 2028. He is concerned with the long-term needs of our country… up to 10 years from now,” she added.

Garuin said the extension of the Malampaya contract to 2037 was vital to making sure that the country does not run out of gas.

“Kung hindi ito ginawa ngayon, mauubusan tayo ng gas,” she said.

[Translation: If this wasn’t done now, we would run out of gas.]

While the Philippines remains open to joint exploration with foreign nations, including China, Garin said practicality dictates focusing on non-disputed areas first.

“Mahirap kang mag-explore, mag-invest ka ng $1 billion kung medyo disputed ang area,” she said.

[Translation: It’s difficult to explore and invest $1 billion if the area is disputed.]

She said companies from Australia, Israel, the US, and UAE are eyeing investments in new exploration blocks, with a total potential value of up to $43 billion (roughly P2.43 trillion).

Asked whether the Energy Department would prioritize safe zones over disputed waters, Garin said they have offered areas near Reed Bank to no avail.

“We have offered those areas, but there are no takers. Investors wouldn’t risk it either,” she said.