Carpio sees nothing unconstitutional in TOR on PH-China joint oil, gas exploration deal

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Metro Manila (CNN Philippines, August 26) — There is nothing unconstitutional in the terms of reference (TOR) that the Philippines has signed with China on a 2018 memorandum of understanding (MOU) on cooperation on oil and gas development, Senior Associate Justice Antonio Carpio said Monday.

He said the document was signed by Foreign Affairs Secretary Teodoro “Teddy” Locsin and Chinese Foreign Minister Wang Yi, who will both also head the steering committee that will oversee the negotiations of all joint projects.

In a forum in Davao City last Friday, Carpio revealed that Locsin signed the TOR three weeks ago, but did not provide details.

“I have read the TOR, but I promised not to divulge the contents except to say that the TOR complies with the MOU,” Carpio told CNN Philippines in a message.

The Senior Associate Justice also told the forum that President Rodrigo Duterte and Chinese leader Xi Jinping could name the members of the steering committee that would supervise negotiations for all joint projects in their meeting this week.

READ: Carpio: PH signed terms of reference on joint oil and gas exploration deal with China

Duterte will hold talks with Xi on Wednesday during his working visit to Beijing. The President earlier said he would raise the controversial arbitral ruling on the maritime dispute in the South China Sea which favored the Philippines, the MOU, and other bilateral issues during his meeting with Xi.

Duterte has long pushed for a joint oil exploration with the Asian giant, under a 60-4O sharing arrangement, with the Philippines taking the bigger chunk.

A highly-reliable source told CNN Philippines that the TOR sets up the inter-governmental steering committee and inter-entrepreneurial working groups provided in the MOU signed in November last year. Government officials, relevant agencies, and other individuals from both the Philippines and China will be part of these groups.

READ: EXCLUSIVE: MOU for talks on joint oil exploration 'without prejudice' to PH, China legal positions

The working groups would consist of representatives from enterprises authorized by the two governments. Beijing had appointed the state-owned China National Offshore Oil Corporation (CNOOC) as its representative in all working groups. The Philippines,

on the other hand, will assign the company that has a service contract with the government. If there are no such enterprises, the Philippine National Oil Company - Exploration Corporation will represent the country.

The enterprises will nominate representatives who will be part of and lead the working group, which will have the authority to hold inter-entrepreneurial commercial and technical arrangements.

Under the TOR, which has been seen by CNN Philippines, the committee and working groups will hold a meeting every three months on agreed dates and venues.

With the signing of the TOR, Carpio said the two countries “can move forward by designating the members” of the committee and working groups.

If a working group is assigned to Service Contract 72 covering the Reed Bank, CNOOC could become a partner in the project with the Philippine firm, Forum Energy,

"If the MOU and TOR are implemented, then China impliedly admits Philippine sovereign rights in Reed Bank in exchange for China’s right to be a service contractor with 40 percent share in the income," Carpio was explained.

This, he said, "can be the template for an agreement among all disputant states.”

Philippines is among six parties with overlapping claims over the strategic waters of the South China Sea, along with Vietnam, Malaysia, Taiwan and Brunei.