Introduction
A calm and stable South China Sea (hereinafter known as the SCS) requires the close cooperation of all claimant states. Dispute resolution or, more specifically, joint development in the SCS has long been promoted by claimant states from the Association of South East Asian Nations (ASEAN) and China. In fact, several maritime boundary disputes in Southeast Asia had been effectively demarcated through the concept of joint development as early as 1979, indicating that this essential cooperative mechanism has already taken shape in the region.
Looking at the current available cooperative modalities, wherein the majority of cooperation is being implemented in bilateral settings, this chapter intends to study the feasibility of implementing multilateral joint development in the SCS, particularly in the Spratly Islands (henceforth known as the Spratlys). In doing so, it reviews the existing cases of bilateral joint development/cooperation that Brunei established with Malaysia, China, and Vietnam, respectively. Factors affecting the possible implementation of these bilateral joint development/cooperation models are then highlighted. Considering these bilateral accomplishments, this chapter attempts to further probe the feasibility of reaching an ambitious multilateral joint development in the Spratlys. The analysis found the prospect of reaching such an ambitious target largely improbable, at least for the foreseeable future. To conclude, this chapter puts forward two humble suggestions on how claimants can best strive to prepare, approach, and achieve successful multilateral joint development in such troubled waters.
Joint development is defined in this chapter as a provisional intergovernmental arrangement established between two or more parties to jointly explore, exploit, and develop resources within a delimited boundary area for economic gains. Joint cooperation, in contrast, refers to a provisional intergovernmental arrangement whereby two or more parties work together with the intention of exploring a better means of deepening the exploitation and utilization of resources within an overlapping area for potential economic gain. By comparison, the degree of engagement in joint development is, by and large, more extensive than that found in joint cooperation.
Existing cases of bilateral joint development and joint cooperation between Brunei and its neighbors
At present, Brunei has three ongoing cases of bilateral joint development/cooperation in the SCS, with Malaysia, China, and Vietnam. While all are established, Brunei’s joint development/cooperation experiences with its three neighbors vary remarkably in terms of pace and intensity, and range from the oil and gas industry to the fisheries industry.
Brunei–Malaysia joint development
Brunei’s (former) maritime dispute with Malaysia arose mainly from Malaysia’s initial reluctance to recognize Brunei’s Exclusive Economic Zone (EEZ) and continental shelf claims. Three years after gaining full independence from Britain in 1984, Brunei released three official maps detailing its rightful maritime zones (Haller-Trost 1994, 2–5, 55). These maps were rejected initially by Malaysia, which claimed that Brunei’s maritime boundary ended at a 100-fathom isobath, as stated on its 1979 map (Haller-Trost 1994, 54). Brunei rebutted and asserted that its maritime rights extend legally up to 200 nautical miles from the baselines of its territorial sea – as specified on the 1982 United Nations Convention on the Law of the Sea (UNCLOS).
Regardless of the official discrepancies between both governments, Brunei and Malaysia officially resolved their overlapping maritime claims in an amicable manner in 2009. The maritime resolution was made possible by the historic signing of an exchange of letters (EOL) between Sultan Bolkiah of Brunei and former Prime Minister Badawi of Malaysia, which essentially tweezed out an old political thorn that had pricked modern Brunei–Malaysia relations for more than two decades.
Under the 2009 EOL, two particular provisions resulted in the laudable success of the Brunei–Malaysia joint development model. First, Brunei and Malaysia agreed to establish a final, permanent maritime boundary of their territorial sea, continental shelf, and EEZ. While the precise content of the maritime delimitation was not made available to the public, press releases and official statements confirmed that Malaysia had ceded two of the formally disputed oil blocks – Block J and Block K (known as Block L and Block M in Malaysia) – to Brunei. By recognizing the aforesaid blocks to be within Brunei’s EEZ, the Ministry of Foreign Affairs Malaysia (2009) confirmed that Malaysia would be given the rights to co-exploit and co-develop the two formerly disputed oil blocks with its Bruneian counterpart for a period of 40 years.
Second, following the final delimitation of their maritime boundaries, Brunei and Malaysia established a “commercial agreement area” on the previously disputed oil blocks – renamed as CA1 and CA2 (previously known as Block J and Block K) – to further facilitate offshore oil and gas operations on a fully commercial basis. As part of the “extended gesture of friendship,” both countries agreed to share revenues obtained from joint oil and gas exploitation (Ministry of Foreign Affairs Malaysia 2010a). Precise details relating to the revenue split between the two national oil companies were, however, not disclosed to the public.
To depoliticize cooperation, both governments had nominated their respective national oil companies to take full charge of the joint development on energy resources. This, in turn, led to the signing of the production sharing agreement (PSA) for blocks CA1 and CA2 between Brunei’s Petroleum Brunei and Malaysia’s Petronas in 2010 (Ministry of Foreign Affairs Malaysia 2010b). Since then, energy cooperation between Petroleum Brunei and Petronas (National Petroleum Limited of Malaysia) has grown positively, prompting governments from both sides to step up cooperation in the wider Bruneian waters. In 2013, local Malaysian newspaper Malay Mail reported that Petroleum Brunei and Petronas had signed a second PSA to further explore and exploit energy resources in the eastern shallow offshore waters of Brunei – Block N and Block Q.
The Brunei–Malaysia cooperative model in the SCS reached even greater heights in 2017 when both governments contracted the Unitization Framework Agreement to formally unitize and jointly develop four straddling hydrocarbon fields: (1) Kinabalu West NAG (KN) field and Maharaja Lela North Panel (MLJ) field; and (2) Gumusut/Kakap (GK) field and Geronggong/Jagus East (GRG/JGE) field (Ministry of Foreign Affairs Malaysia 2017).
Based on a recent working report released by the United States Securities and Exchange Commission, Brunei’s GRG/JGE field (which lies in Block CA1) now forms part of a unitized field with Malaysia’s GK field. Similarly, the parameters for the GRG/JGE and GK fields are established, based on a provisional production and cost-sharing agreement (United States Securities and Exchange Commission 2018). Separately, Brunei’s MLJ field (located in block B offshore Brunei) now forms part of a unitized field with Malaysia’s KN field (a greenfield energy project). According to Jaipuriyar (2013), joint development in these oilfields is estimated to boost gas delivery to at least 5 million cubic meters/day.
While the current Brunei–Malaysia joint development model is still concentrated heavily in the oil and gas sector, since 2015 plans to extend cooperation and engagement in the fisheries sector have been repeatedly discussed by both heads of government during the Annual Leaders’ Consultation between Brunei and Malaysia (see Ministry of Foreign Affairs Brunei 2015, 2016, 2019b; Ministry of Foreign Affairs Malaysia 2017). According to Bandial (2015), a memorandum of understanding (MOU) that would allow fishermen from both countries to fish in the “traditional fishing areas even if they entered the waters of either country” is currently underway.
Brunei–China joint cooperation
In the case of Brunei and China, their dispute in the SCS involves two aspects: boundaries and features. Although Brunei has never formally expressed its stance on (1) China’s nine-dash line or (2) the status of Louisa Reef and Rifleman Bank (both located well within Brunei’s EEZ), one could perhaps take the Sultanate’s punctilious adherence to the 1982 UNCLOS and the official documents it submitted to the Commission on the Limits of the Continental Shelf in 2009 as a rough compass to where Brunei implicitly stands (Government of Brunei Darussalam 2009).
Despite their overlapping maritime claims, Brunei and China have never stopped striving towards resolving the SCS issue by peaceful means. In 2004, the idea of joint development was raised by President Hu Jintao with Sultan Bolkiah. The Ministry of Foreign Affairs of China (2004) reported that the government of Brunei had responded positively towards China’s proposal of joint development in the SCS, noting that Brunei “welcome(s) Chinese businesses[’] exploit[ation] of oil and gas resources in Brunei.” Surprisingly, and despite keen rhetorical statements from both governments, the dearth of news coverage and official reports relating to Brunei–China energy cooperation in the SCS during this time period perhaps seems to indicate otherwise.
Nevertheless, incentives for both governments to jointly explore and exploit resources in the SCS regained momentum after 2011. Since then, at least five MOUs were signed between the two countries to promote energy/maritime/fisheries cooperation within Brunei’s territorial waters (see Ministry of Foreign Affairs Brunei 2013; Ministry of Foreign Affairs China 2013; Darussalam Assets 2016). In 2018, Brunei and China inked their latest maritime-related MOU, wherein both sides agreed to set up a joint steering committee at the ministerial level to expand working relations and cooperation in several key areas, including maritime and energy (Ministry of Foreign Affairs Brunei 2018a).
Indeed, Brunei and China recently held their first Intergovernmental Joint Steering Committee meeting in January 2020, where both sides agreed to establish a working groups to explore and deepen future cooperation in ten key areas. Included among the ten areas is the aforementioned maritime and energy cooperation in the SCS (Ministry of Foreign Affairs China 2020).
Similar to the Brunei–Malaysia joint development model, the Brunei–China cooperation model also runs on a commercial basis, with no direct government involvement. In the oil and gas industry, Petroleum Brunei and the China National Offshore Oil Corporation (CNOOC) agreed to jointly deliver professional and efficient onshore and offshore oilrig drilling services in the waters of Brunei. The energy services will be provided directly by PB Services and China Oilfield Services Limited (COSL), a subsidiary of Petroleum Brunei and CNOOC, respectively (Xu 2014).
Brunei’s Damai Holdings Limited and China’s Zhejiang Hengyi Petrochemicals, on the other hand, are responsible for the major development of Brunei’s largest oil and gas (downstream) industry, as well as the Sultanate’s nascent chemical industry. Located on Brunei Bay, this multi-billion-dollar joint venture between China’s Hengyi and Brunei’s Damai Holdings is often dubbed a game changer for the future oil and gas industry in Brunei.
Meanwhile, in the fisheries sector, Brunei Economic Development Board and Guangxi Hiseaton Foods have been assigned to jointly operate an offshore aquaculture farm in Bruneian waters (Darussalam Assets 2016), while China’s Wanjia Aquatic Products Sdn Bhd contributes its part by sharing cutting-edge offshore aquaculture technology to help Brunei’s inadequate fishing industry breed high-value aquaculture products that are later exported to the enormous Chinese market.
Brunei–Vietnam joint cooperation
For Brunei and Vietnam, their maritime disagreement arose mainly because some parts of the maritime features occupied by Vietnam in the Spratlys overlapped with Brunei’s continental shelf claim. Similar to Malaysia and China, since 2007 Brunei has been working closely with Vietnam to explore joint development opportunities in the SCS.
In 2007, national oil companies from Brunei and Vietnam – Petroleum Brunei and PetroVietnam – signed their first MOU on oil and gas commercial cooperation (Department of Information 2007). While no further information was released, the successful renewal of their first MOU in 2012 could perhaps indicate a rather fair cooperative experience between both countries (see Ministry of Foreign Affairs Brunei 2018b). In 2014, PTSC M&C (an arm of PetroVietnam) was further assigned, as Cheang (2014) writes, to “provide engineering, procurement, construction and commissioning services” for the construction of the Maharaja Lela South platform in Bruneian waters. The oil platform was eventually completed in 2016.
Besides oil and gas, Brunei and Vietnam also seek to jointly cooperate in the fisheries sector. In March 2019, the Ministry of Foreign Affairs Brunei (2019a) announced that both governments were currently working closely to welcome the signing of an MOU to deal with illegal, unreported, and unregulated fishing in the troubled waters. In addition, both governments also look forward “to further enhance maritime cooperation in aquaculture, law enforcement … at sea and freedom of navigation,” reiterating that a Brunei–Vietnam maritime joint cooperation that deals with nontraditional security issues in the SCS would soon be underway.
Factors enabling bilateral joint development and joint cooperation to take place between Brunei and its neighbors
Given the complex nature of the SCS issue, it is therefore heartening to still witness several established and ongoing cases of joint development/cooperation in the SCS. Highlighting the factors leading to the possible implementation of the three cooperative cases (Brunei–Malaysia, Brunei–China, and Brunei–Vietnam) is crucial for preventing maritime tension in troubled waters from ratcheting up further.
Three factors that have greatly influenced Brunei’s positive stance towards joint development/cooperation in the SCS with its neighbors are discussed below.
First, Brunei’s nonconfrontational approach in dealing with the SCS issue has partly contributed to the possible implementation of several joint development/cooperation models witnessed in troubled waters today. While critics have always accused Brunei of downplaying its sovereign maritime rights, they have also tended to overlook one simple fact; that is, incessant standoff...
