Sampaguita: South China Sea peace template?

Could the Sampaguita gas field off the southern Philippines offers a unique opportunity to establish a Joint Development Area in the South China Sea?

The concept's worth investigating.

All of the South China Sea's political and territorial issues come to a head with Sampaguita, an undeveloped natural 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 could set a precedent for the whole region.

Consider some history.

Both China and the Philippines have hydrographically mapped the Reed Bank area, which includes 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 Reed Bank - making both aware of the high stakes involved.

All this is occurring as the Philippines' already-developed Malampaya gas field, just to the northeast of Sampaguita, is running dry.

At present, Malampaya's gas satisfies about a third of Philippine energy demand via a 400-kilometre pipeline connecting it to Luzon. Replacing Malampaya's gas with new supplies from Sampaguita looks an ideal solution to meeting the Philippines' future energy needs.

Ultimately, Reed Bank's Sampaguita Field Service could hold as much as 20 trillion cubic feet natural gas. If confirmed, that will make it many times larger than Malampaya.

For years now, the Philippines' Forum Energy has been negotiating with China National Offshore Oil Company (CNOOC) to develop Sampaguita, specifically an area known as 'Service Contract 72 (SC72).'

But this is in limbo pending a ruling on a Philippine United Nations Convention on the Law of the Sea UNCLOS arbitration claim, which could come as early as August. As a result, the Philippines has declared force majeure on SC72.

Of all the 'hot button' locations in the South China Sea,Sampaguita offers the cleanest opportunity for a 'split the difference' outcome. This could enable all sides to both claim victory and save face. This opportunity may not exist in similar fashion for other disputed South China Sea claims.

By itself, Forum Energy doesn't have the technology or the money to develop Sampaguita. CNOOC and China does.

As a result, Sampaguita could represent an ideal first loan for China's Asian Infrastructure Investment Bank. Lending money for mutually-agreed joint development of Sampaguita could help put to rest fears the AIIB will become just a stalking horse for incremental Chinese assertions of commercial and political hegemony.

There's face-saving precedent for this line of thinking.

Chinese leadersfrom Deng Xiaoping to China's current leader Xi Jinping have voiced support for joint development in the South China Sea. Demonstrating this with Sampaguita using Chinese capital and a Philippine 'social license' would serve everyone's interests while lowering the risks of military confrontation.

That's because joint development of Sampaguita could enable all sides to shift from military and territorial claims to economic logistics. All sides are keen on this.

Under a joint venture, SC72's gas could be developed and delivered to market through an extension of the Malampaya pipeline southward to Sampaguita. It's highly likely Forum Energy and CNOOC already have discussed something along these lines.

SC72represents a unique, precedent-setting prize.

A similar near-term, confidence building opportunity with benefits all around doesn't exist elsewhere in the South China Sea. Agreeing to joint development would yield diplomatic, financial, economic, energy benefits for everyone.