After rejecting Duterte in China, Xi offers Manila gas deal in Philippine EEZ

Xi offers Philippines controlling stake in offshore energy project located in Philippine territory

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Philippine delegation in Beijing, Aug. 29

Philippine delegation in Beijing, Aug. 29 (AP photo)

TAIPEI (Taiwan News) – On Tuesday (Sept. 10), Philippine President Rodrigo Duterte publicly stated that Chinese leader Xi Jinping has offered the Philippines a controlling stake in a joint offshore natural gas venture in the South China Sea on the condition that Manila would be willing to ignore the Permanent Court of Arbitration's 2016 ruling against China.

While Duterte did not go into great detail, he said Xi made the offer at the recent meeting between the two leaders in Beijing on Aug. 29, during which Xi reportedly rejected Duterte's demand that China abide by the ruling. Instead, Xi allegedly offered the Philippines a controlling share of a joint venture project that would take place within the Philippine’s own exclusive economic zone (EEZ).

The proposed location of the natural gas-harvesting operation is sure to anger many in the Philippines who believe that the Duterte administration has already sold the nation’s maritime territory to the Chinese government, which does not respect international law nor legal rulings. In a statement made before the press on Tuesday, Duterte stated the following.

"Set aside the arbitral ruling … Set aside your claim, then allow everybody [to be] connected with the Chinese companies. They want to explore. If there is something, they said [they] will be gracious enough to give you 60 percent. Only 40 percent will be theirs. That is the promise of Xi Jinping."

When asked for details about Xi's so-called offer to the Philippines, Chinese Foreign Ministry Spokeswoman Hua Chunying (華春瑩) demurred, saying only that the two sides have chosen cooperation over confrontation. Reuters reports that a joint venture between Manila and Beijing to extract oil and gas from the South China Sea has been discussed for decades.

However, such a project is a politically contentious issue because of the competing claims to maritime territory. If Manila agrees to a joint deal, which is likely based on the Philippines' economic imperative to access offshore resources, it may be seen as legitimizing China’s claims to the resources and undermining the ruling of the international court made in 2016.