Tuesday, February 28, 2012

Conflict looms in South China Sea oil rush

(Reuters) - When Lieutenant-General Juancho Sabban received an urgent phone call from an oil company saying two Chinese vessels were threatening to ram their survey ship, the Philippine commander's message was clear: don't move, we will come to the rescue.

Within hours, a Philippine surveillance plane, patrol ships and light attack aircraft arrived in the disputed area of Reed Bank in the South China Sea. By then the Chinese boats had left after chasing away the survey ship, Veritas Voyager, hired by U.K.-based Forum Energy Plc.

But the tension had become so great Forum Energy chief Ray Apostol wanted to halt two months of work in the area.

"They were so close to finishing their work. I told them to stay and finish the job," Sabban, who heads the Western Command of the Philippine Armed Forces, told Reuters at his headquarters in Puerto Princesa on Palawan island.

Over the next few days, President Benigno Aquino would call an emergency cabinet meeting, file a formal protest with China, and send his defense secretary and armed forces chief to the Western Command in a show of strength.

The March 2011 incident is considered a turning point for the Aquino administration. The president hardened his stance on sovereignty rights, sought closer ties with Washington and has quickened efforts to modernize its military.

A year later, Forum Energy is planning to return. Top company executives told Reuters the company intends to sail to Reed Bank within months to drill the area's first well for oil and natural gas in decades, an event that could spark a military crisis for Aquino if China responds more aggressively.

The U.S. military has also signalled its return to the area, with war games scheduled in March with the Philippine navy near Reed Bank that China is bound to view as provocative. Read More