(Adds Chinese foreign ministry comment)
By Martin Petty
MANILA, Sept 11 (Reuters) - Philippine President Rodrigo
Duterte said his Chinese counterpart has offered Manila a
controlling stake in a joint energy venture in the South China
Sea, if it sets aside an international arbitral award that went
against Beijing.
Duterte said Chinese President Xi Jinping told him during
their recent meeting that if he ignored the Permanent Court of
Arbitration's 2016 ruling, China would agree to be the junior
partner in a joint venture to develop gas deposits at the Reed
Bank, located within Manila's Exclusive Economic Zone (EEZ).
"Set aside the arbitral ruling," Duterte was quoted as
telling reporters late Tuesday in remarks provided by his office
on Wednesday.
"Set aside your claim," he said, quoting Xi. "Then allow
everybody connected with the Chinese companies. They want to
explore. If there is something, they said, we will be gracious
enough to give you 60%, only 40% will be theirs. That is the
promise of Xi Jinping."
Chinese Foreign Ministry spokeswoman Hua Chunying did not
give specifics at a briefing on Wednesday on the exchange
between the presidents, but said Xi noted that cooperation would
yield greater progress in exploiting the sea's resources.
Hua said Duterte had expressed willingness to hasten
maritime oil and gas exploration and development cooperation
between China and the Philippines. With regard to some "specific
situations," working groups between the two sides would consult
closely, she said.
The tribunal in The Hague clarified maritime boundaries and
the Philippines' sovereign entitlements, and in doing so,
invalidated China's claims to almost the entire South China Sea.
China does not recognise the ruling.
Duterte has sought to befriend Xi, hoping to secure billions
of dollars of investment, avoiding challenging China over its
activities in the South China Sea, including its militarised
artificial islands.
BIG SETBACK
Any agreement to forget the arbitral award and team up with
China would be a major setback to other claimants, especially
Vietnam and Malaysia, which like the Philippines have
experienced repeated challenges from China's coastguard inside
their EEZs.
The United States has called that bullying and coercion
aimed at denying rivals' access to their energy assets.
Duterte did not say if he had agreed to Xi's offer, but said
the part of the arbitral award that referred to the EEZ "we will
ignore to come up with an economic activity".
The tribunal said the Philippines had legal rights to
exploit gas deposits that China also claims at the Reed Bank,
about 85 miles (140km) off the Philippine coast.
The Philippines only accessible gas resources at the
Malampaya fields are set to run out by 2024.
A joint project with China has been talked about for
decades, but has gone nowhere because of the competing claims.
Joint activity could be deemed as legitimising the other side's
claim, or even relinquishing sovereign rights.
Philippine Foreign Secretary Teodoro Locsin on Wednesday
told news channel ANC that a preliminary agreement between China
and the Philippines would avoid stating which country was
entitled to the gas.
"It's very clear - no legal position is compromised if we
enter into this agreement," Locsin said, adding that putting
aside the arbitration case was immaterial, because an
international court had already made its decision.
"It's final and binding," he added.