China says there could be 'trouble' if oil explorations in West PH Sea proceed — Duterte

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Metro Manila (CNN Philippines, June 28) — President Rodrigo Duterte revealed he was warned by Chinese President Xi Jinping that Philippine oil explorations in the West Philippine Sea "could mean trouble."

"Sabi ko, I'm going there to dig oil. Sabi ni Xi Jinping, in whisper, tanungin mo sila, alam mo Mayor Duterte, we just restored our friendship. It was not good for a number of years pero huwag na muna tayo pag-usapan. Sabi niya, let's talk about helping each other, trade, commerce, investments, China can help. Doon na nagstart," he said Thursday.

[Translation: I said, I'm going there to dig oil. Xi Jinping said, in whisper, ask them, he said you know Mayor Duterte, we just restored our friendship. It was not good for a number of years but let's not talk about that now. He said, let's talk about helping each other, trade, commerce, investments, China can help. That's where it started.]

Duterte said he told Xi, "No, no, balik ako [I will go back]. I want my oil because that is ours."

According to the President, Xi replied, "He said, 'No, that could mean trouble.'"

Duterte made the revelation during an ambush interview after the oath taking of Senator-elect Bong Go in Malacañang.

Duterte then took a swipe at his critics, "Kayong mga ugok, ang alam niyo kayo lang ang bright, ul*l, 'pag lumabas 'yung...that is trouble. Ano'ng ibig sabihin niyan, from the mouth of President (Xi),"

[Translation: You fools, you think you are the only ones who are bright, a**h***s, when it comes out...that is trouble. What does that mean, from the mouth of President (Xi).]

In 2017, Duterte said Xi told him China would "go to war" if the Philippines drilled for oil in the South China Sea.

"He told me, ‘We do not want to quarrel with you. We would want to maintain the present warm relationship. But if you force the issue, we will go to war’,” Duterte said in May 2017.

Duterte has consistenly said the country cannot afford to go to war with China.

In May, Duterte signed Executive Order No. 80 which allows third party participants in service contracts awarded by the government to the Philippine National Oil Company - Exploration Corporation (PNOC EC), the upstream oil and gas subsidiary of the Philippine National Oil Company. PNOC EC can also participate in service contracts awarded by the government to third parties.

The order effectively repeals Executive Order 556 signed by Gloria Macapagal-Arroyo which prohibits farm-in and farm-out agreements. Arroyo's order also mandated government agencies to follow "strict bidding procedure" in forging partnerships with interested parties.

Farm-in/farm-out refers to the practice of allowing third party participants in oil and gas exploration and development so the risks involved in a project can be spread out. The transaction of the entity acquiring interest is considered a "farm-in" while the transfer of the interest is a "farm-out" deal.

The Department of Energy had pushed for the repeal of the Arroyo-era EO to make way for pending farm-in deals including the controversial Service Contract 57.

PNOC EC was awarded SC 57 in September 15, 2005, which covers a total of 7,200 square kilometers in offshore Northwest Palawan — an area lying within the country's exclusive economic zone.

State-owned China National Offshore Oil Corporation farmed-in into SC 57 with 51% participating interest, while Jadestone Energy (then Mitra Energy Ltd.) also farmed-in into the contract with 21% interest. PNOC has the remaining 28% percent interest.

Duterte's comments came as the country is dealing with the aftermath of an allision between a Filipino fishing boat and a Chinese vessel near Recto Bank earlier this month.

Twenty-two Filipino fishermen were left to fend for themselves at sea after the Chinese vessel rammed into their boat.

The fishermen have called on the government to make the Recto Bank — which is part of the EEZ — exclusive to Filipinos.

Duterte has apologized to the fishermen, but said the incident does not warrant sending troops to the area.

Talks of Duterte's impeachment have come up since the incident, but the President told his critics he would send to jail those who attempt to move him out of office.

RELATED: DFA chief on Chinese fishing in PH's EEZ: 'Can we move on?'

Presidential Spokesperson Salvador Panelo also said the President's earlier statement on China continuing to fish in the EEZ was "misconstrued."

On Thursday, Presidential Spokesperson Salvador Panelo said, "After watching the President's interview and reading its transcript, I have evaluated that it appears that what the President meant was China would not allow their nationals from fishing in our EEZ since they treat us as their friends, knowing that permitting their fishermen to fish in our EEZ would only result in an unwanted hostility leading to an armed confrontation."

Panelo added he had asked President Rodrigo Duterte if this was what he did mean, and the President answered in the affirmative.

READ: Duterte claims earlier deal with Xi allows China to fish in Recto Bank

CNN Philippines senior digital producers Pia Garcia and Chad de Guzman contrinbuted to this story.