The fuel crisis and the South China Sea dispute
The Philippines depends almost entirely on the Persian Gulf for its oil needs. Today's severe crisis is forcing Manila to seek an agreement with Beijing for relief on fuel and fertiliser supplies. Yet both countries are loggerheads over the sovereignty of an area of the South China Sea rich in untapped oil and natural gas.
Milan (AsiaNews) – “China stands ready to strengthen coordination and collaboration with Southeast Asian countries and jointly address energy security issues,” said today Chinese Foreign Ministry spokesperson Lin Jian, at his usual daily press conference.
Mr Lin was responding to a specific question from Reuters over ongoing contacts between the Philippines and China regarding the supply of oil and fertilisers, held up in the Strait of Hormuz, one of the effects of the crisis triggered by the war in the Middle East.
The problem is becoming increasingly acute for the Philippines, which gets 98 per cent of its oil from the Persian Gulf. Fuel shortages are now making becoming a problem in the Southeast Asian country, as the prices of petrol and diesel skyrocket. Fears of a spiralling price hikes are mounting; even jeepney drivers are protesting.
To address the situation, President Ferdinand Marcos Jr. has ordered the Manila Metro fare to be halved, encouraging commuters to stop using their vehicles and save on fuel. Meanwhile, the Philippine peso closed today at 60.10 to the dollar, an all-time low.
In this context, China’s decision to block exports to protect national reserves is not helping.
It is worth remembering that seabed energy resources is the main driver of the low-intensity military standoff between the two countries over the Philippines’ exclusive economic zone in the South China Sea.
The conflict, characterised by blockades and ship ramming, stems from opposing claims to an area containing vast untapped reserves of oil and natural gas, estimated at up to 125 billion barrels.
Despite this potential, attempts to launch joint exploration projects between China and the Philippines have been hampered by the dispute over sovereignty.
Tensions in the region remain high, particularly in strategic areas like the Second Thomas Shoal, a submerged coral reef in the Spratly Islands in the South China Sea, located about 200 kilometres west of Palawan, Philippines.
The reef is occupied by a Philippine Navy garrison aboard the BRP Sierra Madre, which was intentionally grounded on the reef in 1999 and has been regularly refuelled since then.
Despite an international arbitration ruling in 2016 that its claims were unfounded, Beijing continues to claim sovereignty, based on the so-called Nine-Dash Line as its maritime border.
Until now, China has never used these disputes as leverage to cut off fuel supplies to the Philippines. But the new crisis created by the blockade of the Strait of Hormuz could now play in its favour.
Manila could be forced to reach the agreement that Duterte had sought during his presidency, but which the Marcos administration had rejected, focusing heavily in recent years on defending national sovereignty in the disputed waters.
Another issue is fertilisers, an essential petroleum derivative for an agricultural country like the Philippines. In fact, the Philippine Department of Agriculture announced that it is negotiating with China ways to stabilise local supply. It is estimated that Chinese stockpiles are the equivalent of about 285 days' supply, hence the Philippine request for assistance.
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04/09/2008
