Could the Sampaguita gas field offer a glide path to a South China Sea peace?
Sampaguita: Joint Development Area
The concept’s worth investigating. All the South China Sea’s political and territorial issues come to a head with Sampaguita, an undeveloped gas field off the southern Philippine island of Palawan.
As the South China Sea’s most promising near-term developable gas field, joint development of Sampaguita provides and opportunity to set the tone for the whole sea.
Consider the history: both China and the Philippines have hydrographically mapped Reed Bank, which contains Sampaguita. China and the Philippines already have discussed ways to jointly develop Reed Bank. And both China and the Philippines have engaged in clashes at sea in and around it.
The Philippines’ Malampaya gas field, located northeast of Sampaguita, is running dry. Malampaya’s gas satisfies nearly a third of Philippine energy demand via a 400-kilometer pipeline connecting to Luzon. Replacing Malampaya’s gas with gas from Sampaguita looks like an ideal solution to the Philippines’ future energy needs.
For years now, the Philippines’ Forum Energy has been negotiating with China National Offshore Oil Company (CNOOC) to develop Sampaguita, specifically an known as ‘Service Contract 72 (SC72).’
But this has been suspended pending an announcement on a Philippine United Nations Convention on the Law of the Sea UNCLOS arbitration claim, for which a ruling could come in the next few months. In the meantime, the Philippines has declared force majeure on SC72.
Sampaguita could offer the cleanest way forward for a ‘split the difference’ outcome in the South China Sea. This could enable all sides to save face, an opportunity that may not exist in any similarly clean fashion for other overlapping claims in the South China Sea.
Forum Energy doesn’t have the money or technology to develop Sampaguita. CNOOC does.
Sampaguita also could be an ideal first loan for the China-dominated Asian Infrastructure Investment Bank. It would demonstrate the bank isn’t just a stalking horse for incremental assertions of Chinese clout.
Chinese leaders from Deng Xiaoping to China’s current leader Xi Jinping have voiced support for joint development in the South China Sea. Doing so with Sampaguita, using Chinese capital and Philippine ‘social license,’ could serve everyone’s interests.
Given this, SC72 could be developed under a joint venture between Forum Energy and CNOOC that involves both developing SC72 and extending the Malampaya pipeline to Sampaguita. It’s highly unlikely Forum Energy and CNOOC haven’t already discussed something along these lines.
SC72 represents a potentially big, unique, precedent-setting prize that doesn’t exist elsewhere in the South China Sea in any similar form. Working out a joint development deal could yield a host of benefits for everyone: diplomatic, financial, economic, energy-wise.
Reed Bank’s Sampaguita Field Service may hold as much as 20 trillion cubic feet natural gas. If confirmed, it will prove many times larger than Malampaya.