Could joint oil and gas projects ease Beijing and Manila’s South China Sea tensions?

SOUTH CHINA SEA, SCARBOROUGH SHOAL, SECOND THOMAS SHOAL, MANILA, BEIJING, SHANGHAI, VIETNAM, MALAYSIA, 30 AUGUST 2026 —

China and the Philippines have been urged to resume joint South China Sea energy exploration as a way of easing tensions in the disputed waters.

The report, published on Monday by the Shanghai Institutes for International Studies think tank, said the relationship between the two countries was at a “rather sensitive and critical crossroads”. “Joint oil and gas exploration in the South China Sea by China and the Philippines could serve as a feasible early-harvest project,” the report said.

It added: “This would not only alleviate or even solve the Philippines’ energy needs and reduce the escalation of tensions between the two sides due to unilateral actions, thus contributing to regional security and stability, but also help resolve the lack of trust and confidence between the two sides due to the asymmetry in their military and economic strength.” The report also argued that Beijing and Manila should identify and pursue economic projects that served their shared interests and had low security implications as a way of building trust.

Earlier this month, Philippine President Ferdinand Marcos Jnr said there was a “distinct possibility” of undertaking joint oil and gas exploration with China, adding that he hoped to “reset” relations between the two countries. In March, Marcos declared a national energy emergency in the wake of the US-Israeli attack on Iran. Although Beijing and Manila signed a memorandum of understanding on oil and gas cooperation in 2018, little progress has been made since then.

The long-running territorial dispute between Manila and Beijing in the South China Sea continues to overshadow their relationship and there have been regular clashes between their respective coastguards at disputed features such as Scarborough Shoal and Second Thomas Shoal. The two countries have also clashed over the recent arrests of dozens of Chinese steel workers in the Philippines.

The Philippine constitution says the state must retain full control over natural resources, but the report argued this did not eliminate the scope for joint oil and gas exploration in the disputed areas.

“China and the Philippines can undertake the necessary and comprehensive institutional design for how future cooperation should be conducted and how fairness and justice can be promoted in the process of structuring such cooperation, so as to avoid differences and conflicts arising from the asymmetry in their respective strengths and their sovereignty disputes, which could trigger unnecessary confrontation,” it said.

In 2005, the two countries signed an agreement with Vietnam to conduct seismic surveys in the South China Sea, but despite hopes that this might pave the way for further joint developments, the deal expired in 2008 and follow-up efforts did not get off the ground.

According to the report, Anna Rosario Malindog-Uy, vice-president of the Manila-based Asian Century Philippines Strategic Studies Institute, said legal and political differences did not have to be “absolute obstacles” to economic cooperation, pointing to Beijing’s “pragmatic arrangements” with two rival South China Sea claimants, Malaysia and Vietnam.

The report also said marine environmental protection was the area with “the greatest potential for cooperation”, arguing it was “characterised by low political sensitivity, a high degree of consensus and practical feasibility”.

The authors – including Li Kaisheng, Zhou Shixin, Xue Chen and Zhang Qiyue, from the Shanghai think tank, as well as Lucio Blanco Pitlo, president of the Philippine Association for Chinese Studies – suggested that the two countries could resume joint scientific expeditions to monitor marine ecosystems, coral reefs and pollution.

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