How strategic delays pushed the Philippines toward joint oil and gas exploration with China
Decades of delay, rising energy pressure, and the strategic trade-offs behind Manila’s pivot to joint exploration with Beijing.
Restrictions in the Strait of Hormuz have exposed the structural dependence of the Philippines on oil imports. In response, the administration of Ferdinand Marcos Jr. recalibrated into a pragmatic approach in the South China Sea (SCS)–a joint oil and gas exploration with China. Analysts believe Trump is making China win, who only needs to watch its rival collapse from within without firing a single shot. A joint oil and gas exploration in the Philippine Exclusive Economic Zone (EEZ), or within the West Philippine Sea (WPS), is indeed transformative for Filipinos, but it would also hand another win for China. Viewed historically, it is a reactive fallback, not a strategic choice for the smaller country trapped in asymmetric relations and a global energy crisis. Although triggered by a 21st-century war, the eventuality of this move is path-dependent on decades of institutional paralysis and underinvestment in a unified maritime strategy that integrates resource use.
This is the third time since the 2005 Tripartite Agreement for Joint Marine Seismic Undertaking (JMSU) between the Philippines, China, and Vietnam, and the 2018 Memorandum of Understanding (MOU) on Cooperation on Oil and Gas Development between the Philippines and China, that the two countries are exploring the possibility of a hydrocarbons cooperation in disputed waters. In 1994, a consortium among the Philippines, China, and the United States was also proposed but never pushed through.
Each attempt fails for the same reasons. The ownership and exploitation of natural resources by wholly-owned foreign corporations is unconstitutional. More importantly, the legal and political implications of joint exploration remain deeply contentious.
While UNCLOS allows joint exploration in contested waters, the 2016 arbitration’s nullification of the nine-dash line makes the WPS legally undisputed. To enter a “joint” arrangement would imply that the waters are disputed after all, undermining Manila’s own legal victory. Domestic politics compounds the dilemma. No administration wants to be remembered as the government that compromised sovereign rights in favor of accommodation with Beijing, particularly when anti-China sentiment remains a matter of political legitimacy.
From China’s perspective, “setting aside disputes and pursuing joint development” has been a constant call in its dispute settlement since the 1980s. In principle, it promises mutual economic gains for both sides. However, it comes at the cost of accepting China’s sovereignty, binding smaller states into its laws that must govern operations, and thereby normalizing its status quo presence, albeit illegal. Furthermore, there is a trust deficit in China’s commitment to comply with rules and agreements.
There are both risks and opportunities in pursuing joint exploration with China in the WPS. However, what is often missing from public discourse is a deeper scrutiny of the prevailing assumption that compromise is the only way to harness the energy sources sitting in the WPS, and that China’s aggression is the only thing that has been stopping the Philippines from doing so independently. This is not to critique joint exploration itself; if carefully structured and aligned with legal grounds and developmental objectives, a negotiated arrangement may indeed prove to be the most practical move. Rather, the more important question is how the Philippines arrived at a point where such a compromise is perceived as the only path forward.
Other Southeast Asian claimants have not accepted this option.
In the history of SCS disputes, multiple claimants have employed several approaches to assert territorial claims. These are not limited to China’s active maritime enforcement and militarization of the features, or the Philippines’ media transparency, defense alliances, and international law. Vietnam and Malaysia’s strategies, despite China’s protests and periodic harassment, also include economic integration in sectors such as hydrocarbons and fisheries. Arguably, sovereignty must not be asserted merely through legal rhetoric or militarization, but through sustained physical and economic presence. After all, territorial demarcations in contested areas are also driven by the need to determine who gets access to which resources.
Historically, the Philippines pursued hydrocarbon exploration in the WPS since the 1970s. It was also one of the early movers in Southeast Asia to occupy several features in the Kalayaan Island Group (KIG) and legalize the claims. But rather than a politically sustained strategy of physical assertion, occupied islands never truly expanded, and oil and gas explorations remained an economic activity separate from sovereignty and discouraged by weak enforcement, years of stalled operations, and risk aversion or defensiveness.
Today, the Philippines stands as the only major Southeast Asian claimant not actively developing new hydrocarbon resources in waters contested by Beijing. And this was not always due to China.
Successful extraction has been conducted with state-owned and private service contractors in safer, nearer oil and gas blocks in offshore Palawan, outside core contested areas. This includes the almost-depleted Malampaya, the decommissioned Nido-Matinloc Complex, and ongoing exploration and production in the Galoc, Malampaya-East (extension), and Calamian oil fields, among others. Limited deepwater drilling technology, geological uncertainty, and commercial viability concerns that require years of exploration before production largely constrain operations. It was only in the 2010s that security concerns became a decisive factor in hydrocarbon operations. The 2011 Reed Bank incident involving MV Veritas Voyager and the 2019 Reed Bank collision involving the Filipino vessel Gem-Ver conducting survey work for Forum Energy were turning points.
Yet by then, the Philippines had already lost valuable time on an investment that takes years to generate returns.
This reflects a deeper institutional weakness in Philippine maritime policy and the persistent tendency to oscillate between legal-diplomatic and military approaches instead of employing a broader statecraft, one that integrates a market-centric lens.
Philippine exploration at Reed Bank (Recto Bank) was halted for decades by both Manila’s legal moves and fear of Beijing’s retaliation. In 2014, the government banned oil and gas activities in the WPS while the arbitration trial was ongoing. Even after the ruling and calls from contractors to lift the moratorium in Reed Bank, persistent Chinese aggression prevented companies from consistently exploring the WPS. Reed Bank is believed to be almost on par or even greater than the Malampaya gas field, which has been supplying 30% of Luzon’s energy until its expected depletion by 2027.
Following the 1995 Mischief Reef incident, Fidel Ramos responded by modernizing the armed forces. The incident caught the Philippines off guard, exposing maritime incapacity due to its delayed discovery of China’s construction activities. Although Ramos already ordered the expansion of facilities, including the construction of lighthouses in 1994 to reinforce claims and expand petroleum exploration, major renovations only began in 2018, largely due to institutional paralysis. In the end, the only “solution” that materialized at the time was the signing of the 1998 Visiting Forces Agreement with the United States, which at the time was looking for an alternative military base in Southeast Asia after it left Subic in 1991.
In 2011, before the Scarborough Shoal standoff in 2012, and the filing of the arbitration case in 2013, Benigno Aquino III created the Zone of Peace, Freedom, Friendship and Cooperation (ZOPFF/C) to separate non-disputed and disputed waters based on international law. The goal was to determine areas for marine conservation and national development, where a “Joint Cooperation Area” may be conducted under applicable laws. Central to this approach is the Philippine Coast Guard’s role in upholding the “white-to-white, gray-to-gray” principle, where civilian vessels (“white hulls”) should enforce civilian law, and reserve military assets (“gray hulls,” such as naval ships) for military encounters to prevent escalation. It did not last long when the Philippine Navy arrested Chinese poachers, which then escalated into a military standoff with China that most likely saw this as an opening to seize control of the Scarborough Shoal. In 2013, this forced the government to pursue arbitration. Since then, fishers and enforcement authorities have been restricted from the area.
These present a pattern: initiatives were never institutionalized into a long-term, unified maritime doctrine. There is evident fragmentation across maritime institutions and non-state actors that have stakes in the dispute. Philippine policy remained reactive, responding to crises after they emerged rather than shaping facts before they did. The sudden revival of joint exploration talks with China triggered by the war in Iran is the price of a state confronting the consequences of having waited too long to invest in oil and gas exploration as part of its maritime policy. Not to mention underlying structural vulnerabilities caused by an overreliance on oil liberalization and imports.
Now, years of strategic failures leave Manila cornered. With Malampaya nearing depletion, energy supply vulnerable to geopolitics, and a Filipino public demanding tangible actions from the government, the pressure to exploit WPS is intensifying. But after decades of delay, the Philippines now confronts that imperative under far worse conditions as China’s physical presence becomes more entrenched than it was in the pre- to early 2000s.
There could be more than just institutional (in)competence why the Philippines has been less willing than its Southeast Asian counterparts to pursue unilateral, high-risk exploration in contested waters. There is a need for more public data and scholarship to conclusively attribute legal, geographic, commercial, or alliance-related considerations in shaping Manila’s calculus in the WPS. This includes deepwater drilling costs, investor risk tolerance, uncertainty over reserve viability, and the differing intensity of Chinese presence across claimant states. In this light, the Philippines’ repeated linkage of offshore development to joint exploration with China may also reflect a broader recognition that unilateral development has become politically and operationally difficult under present conditions.
If joint exploration is the way forward, the debate should not be simply whether it should proceed, but how it should be pursued. Any future arrangement must be anchored in full transparency to ensure public trust and avoid the secrecy that undermined previous initiatives such as the JMSU. Negotiations should clearly affirm that any agreement remains subject to Philippine laws. Equally important is the inclusion of non-state stakeholders that have long been left out in WPS policies in overall consultative processes, not only in matters of energy resources, to ensure that strategic decisions are not made solely within closed political channels.
This article reflects reporting and analysis made by The Southeast Asia Pacific Frontier. If you have additional context, a different take, or a perspective we’ve missed — whether you’re a researcher, a policy practitioner, or someone living with these realities on the ground — this is an evolving story and we’d like to hear from you. Drop a comment below or get in touch.
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