The Philippines is pushing back against China’s South China Sea (SCS) invasion and “grey zone warfare” via new E&P operations and military transformation. Manila is bolstered by support from the Trump administration and scores of allies providing diplomatic and military assistance. This signals a new phase of SCS friction, which will impact regional E&P.
The Philippines’ new energy plan. Manila announced in 2023 its “Philippine Energy Plan (PEP) 2023–2050,” asserting its importance for economic security. The PEP aims for renewable energy to account for over 50% of domestic needs by 2040. It wants increased domestic E&P to meet the remainder.
Manila’s current E&P strategy then, is twofold: First, explore eight new “predetermined areas” (PDAs) to boost domestic hydrocarbon sources. Second, search for hydrocarbons in waters contested by China’s “grey zone warfare.” These waters, mostly in the SCS north of Palawan, lie within the Philippines’ 200-nautical-mile EEZ, as recognized by the Permanent Court of Arbitration in 2016. Previous governments had avoided exploring here since 2014. Not anymore.
PDA bidding began in 2024. Fifty companies participated, including firms from North America, Europe, Asia, and the Middle East. Manila has withheld their names, most likely for security purposes.
Currently, there are eight PDAs: Four in the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) — three for petroleum, one for coal. The other four are in Luzon and Visayas — two for petroleum, two for hydrogen.
Key projects include onshore PDA-BP-1 in the Cotabato basin (BARMM), where 14 wells have been drilled. Ten show oil or gas potential. PDA-BP-2 and BP-3 are offshore in the Sulu Sea. PDA-DP-1, offshore Northern Palawan, contains the Calauit oil fields with an estimated 6.1 MMbbls of oil.
Manila’s contested-water strategy continues operations off Palawan, with the major new initiative being Malampaya Phase 4 (SC 38).
The original Malampaya project, operated by Prime Infra, once held 3.5 Tcf of gas but will be depleted by 2027. It has supplied up to 40% of Luzon’s power.
Malampaya Phase 4 seeks to extend production from legacy wells and identify new ones, based on “promising geological data.” It’s one of the largest E&P projects in the Philippines in a decade, worth $893 million.
Philippine-based Prime Energy Resources Development leads the project. Noble Corporation is also involved, providing the 7th-generation drillship Noble Viking. Prime Energy is drilling two new deepwater wells — Camago-3 and Malampaya East-1 — to exploit existing reservoirs, and an exploration well, Bagong Pagasa-1, 15 km from the current Malampaya field.
Drilling began in June 2025. Reserve estimates have not been released. First gas is expected by late 2026. At peak, Malampaya 4 should produce approximately 1.7 gigawatts of power for Luzon.
China’s grey zone threats. China conducts grey zone operations against the Philippines — directly threatening Palawan E&P — via the Chinese Coast Guard (CCG), the People’s Armed Forces Maritime Militia (PAFMM), and the People’s Liberation Army Navy (PLAN). Tactics include ramming, blockades, PAFMM swarming, water cannon attacks, ship boarding, hand-to-hand combat, destruction of seismic gear, aerial harassment by helicopters, blinding lasers, and more — violence just below the threshold of war. For now.
Still, Beijing regularly threatens full-scale conflict in the SCS. And the PLAN, which carries more firepower than the CCG, has gradually increased participation in these harassment operations as of late.
Manila grows a spine. When President Ferdinand Marcos, Jr., took office in 2022, his administration declared an end to tolerating China’s bullying. He first signed the Philippine Maritime Zones Act and the Philippine Archipelagic Sea Lanes Act, reaffirming the country’s offshore territory rights.
Marcos then authorized the Ministry of Defense’s Comprehensive Archipelagic Defense Concept in January 2024. This three-part strategy includes: 1) establishing effective military presence in contested waters, 2) military modernization, and 3) alliance-building.
Military presence includes deploying more Philippine Navy, Coast Guard, and Air Force assets to monitor and confront Chinese aggression and to protect E&P assets. Manila also uses its own version of the PAFMM to track and publicize Chinese provocations — a tactic called “assertive transparency.”
Military modernization stems from the Re-Horizon defense program, which integrates the Philippines’ island and maritime zones into a unified, flexible defense network. It includes a $35 billion, 10-year investment in ships, fighter jets, helicopters, command and control systems, and other weapons.
Regarding alliances, the Philippines now counts a growing list of countries diplomatically and militarily opposing China. The U.S. is central, having provided $336 million in Trump-era military aid. Other allies include the UK, Canada, Germany, Italy, South Korea, India, Vietnam, Malaysia, Indonesia, Brunei, Japan, Australia, New Zealand, and France. Many have signed defense pacts or held joint exercises with Manila. None of this is idle talk. France deployed an aircraft carrier to Philippine waters in February 2025. All U.S. military branches regularly operate alongside Philippine forces, including U.S. Navy carrier groups.
This is new ground for both China and the Philippines. While pro-Philippine momentum is strong, Beijing is expected to keep targeting Philippine territory and E&P operations. The limits of China’s grey zone warfare will be tested during 2025. A shooting war cannot be ruled out. The risks to E&P extend beyond offshore Palawan. Energy companies in the Philippines should take heed. WO