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Manila is open to energy cooperation with Beijing — but only on its own terms. As talks over South China Sea resources resume, the Philippines is making one thing unmistakably clear: sovereignty is not on the table.

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A Firm Statement From Manila

The Philippine Department of Foreign Affairs issued a pointed declaration on Sunday: any agreement on oil and gas cooperation with China — or any other foreign government — will be made exclusively in accordance with Philippine law, constitutional rules, and the country's sovereign rights.

The statement comes as public debate intensifies over whether Manila should work with Beijing to develop energy resources in the disputed South China Sea. The Philippines calls this body of water the West Philippine Sea, reflecting its claim to the resources within its exclusive economic zone (EEZ — the area up to 200 nautical miles from a country's coastline where it has exclusive rights to natural resources).

What Triggered the New Talks?

The backdrop is a fast-moving energy crisis. Philippine President Ferdinand Marcos Jr. declared a "state of national energy emergency" on March 24, as fighting between the United States, Israel, and Iran sent global oil prices soaring and disrupted supply chains. The Philippines imports the vast majority of its oil from the Middle East, leaving it acutely exposed.

In a Bloomberg interview, Marcos said the Middle East conflict could be the "impetus" for the Philippines and China to finally reach an agreement on joint energy development. Those comments signaled a notable diplomatic shift — and opened the door to renewed talks with Beijing.

At the end of March 2026, the Philippines and China held back-to-back high-level meetings in Quanzhou, China, tackling South China Sea tensions while exploring initial cooperation on oil and gas, alongside energy and fertilizer supply issues linked to the Middle East conflict.

A Deal Decades in the Making — and Still Not Done

The idea of joint energy exploration in the South China Sea is not new. It has been discussed, stalled, revived, and abandoned multiple times over the past two decades.

Under the previous Duterte administration, the two countries signed a memorandum of understanding in 2018 to establish a joint steering committee for energy cooperation. But three years of negotiations ultimately ran aground on the issue of sovereignty. The Philippine Constitution requires full state control over the country's natural resources — a condition that clashed directly with Beijing's insistence on terms that would have diluted that control.

In 2023, the Philippine Supreme Court declared a similar arrangement unconstitutional, citing violations of provisions requiring full state control over natural resources.

Energy expert and former undersecretary Jose Layug Jr. warned that the Philippines cannot afford to go it alone — exploration costs can reach up to $100 million per well. That financial reality is one reason why cooperation with foreign partners remains attractive, even when the political risks are high.

What's Actually at Stake Beneath the Waves

The South China Sea is believed to hold enormous oil and gas reserves. At the center of the current discussions is Reed Bank — a submerged area within the Philippine EEZ that energy analysts say contains significant natural gas deposits capable of helping replace the country's aging Malampaya gas field, which is nearing depletion.

The 2016 international arbitration tribunal ruled that China had violated Philippine sovereign rights by interfering with Philippine petroleum exploration at Reed Bank. Beijing has never accepted that ruling.

China's "Nine-Dash Line" — the Root of the Problem

At the heart of the dispute is China's sweeping claim over most of the South China Sea, marked on maps by a so-called "nine-dash line." In 2016, the Permanent Court of Arbitration ruled that China's nine-dash line had no legal basis under international law, and upheld the Philippines' sovereign rights over its EEZ, including areas such as Reed Bank.

China has repeatedly dismissed that decision, with the Chinese Foreign Ministry calling it "nothing but a piece of waste paper." Despite the ruling, Beijing has continued to assert its presence in contested waters — including through coast guard confrontations with Philippine vessels that Manila has documented and made public as part of its so-called "transparency policy."

Manila's Firm Conditions

The Philippine government is threading a difficult needle: exploring energy cooperation without surrendering legal ground.

Presidential Communications Office Undersecretary Claire Castro assured Filipinos that no Philippine interests will be lost and none will be given away. She added that there is no secret deal with China on joint oil exploration.

Foreign Secretary Theresa Lazaro acknowledged that constitutional challenges remain and that any future negotiations would be informed by the failures of previous attempts.

Meanwhile, China's embassy in Manila stated that its "door to dialogue" remains open — but told the Philippines it must first "demonstrate sincerity" before negotiations can advance. That framing has raised eyebrows in Manila, where many see it as Beijing's attempt to set the terms before talks even begin.

A Balancing Act With Global Dimensions

The situation forces Manila to manage competing pressures simultaneously. The Philippines currently chairs ASEAN (the Association of Southeast Asian Nations) and has been a key partner in U.S. efforts to strengthen the rules-based order in the Indo-Pacific. Any deal with China that appears to compromise Philippine sovereignty would send shockwaves well beyond Manila.

Since taking office, Marcos has openly challenged China's claims in the South China Sea, fortifying security relations with the United States and publicly documenting China's aggressive actions in Philippine waters. His recent openness to energy talks with Beijing therefore represents a significant, if cautious, recalibration.

The outcome of these negotiations — if they advance — will have consequences far beyond energy prices. They will serve as a litmus test for how a smaller nation can stand up to a powerful neighbor under international law, while still pursuing its own people's economic interests.

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Sources

1. Reuters – "Philippines says any energy deals with China must respect its sovereignty" (April 12, 2026): https://www.reuters.com/business/energy/philippines-says-any-energy-deals-with-china-must-respect-its-sovereignty-2026-04-12/
2. The Diplomat – "Is the Philippines Really About to Restart Joint Oil Exploration With China?" (April 2026): https://thediplomat.com/2026/03/is-the-philippines-really-about-to-restart-joint-oil-exploration-with-china-in-the-south-china-sea/
3. Rappler – "Marcos: Oil crisis could be 'impetus' for PH-China joint gas development" (March 2026): https://www.rappler.com/philippines/marcos-china-joint-gas-exploration-south-china-sea/
4. Philippine Star – "Philippines interests safeguarded in oil exploration with China" (March 2026): https://www.philstar.com/headlines/2026/03/31/2518039/philippines-interests-safeguarded-oil-exploration-china-palace
5. Manila Times – "PH, China reopen oil exploration talks" (March 2026): https://www.manilatimes.net/2026/03/30/news/ph-china-reopen-oil-exploration-talks/2309945
6. Asia Maritime Transparency Initiative / CSIS – Arbitration Ruling Analysis: https://amti.csis.org/arbitration-ruling-analysis/
7. Lawfare – "Tribunal Issues Landmark Ruling in South China Sea Arbitration": https://www.lawfaremedia.org/article/tribunal-issues-landmark-ruling-south-china-sea-arbitration
8. Tribune (Philippines) – "Philippines-China Oil Talks Gain Traction" (April 2026): https://tribune.net.ph/2026/04/06/philippines-china-oil-talks-gain-traction-manila-cant-afford-drilling-alone

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