Hogan Lovell OffshoreBook 2023 230809 OnlinePDF - Flipbook - Page 244
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utilization of ocean, solar and wind energy
and mentions the EEZ.119 Under said EO
and IRR, a product sharing contract may
be entered into over offshore waters in the
EEZ, among others.120 A production sharing
contract covers offshore waters within the
Philippine territory, contiguous zone and exclusive economic zone. The product sharing
contract is limited to qualified Philippine
nationals,121 such as a corporation organized
under Philippine laws with at least sixty percent (60%) of its capital owned by Philippine
citizens.122
Republic of the Philippines
However, the EO and its IRR were issued
prior to the RE Act IRR Amendment. Further,
EO 462 and the EO 462 IRR regulate "production sharing" regarding wind energy and not
the exclusive use of the seabed and subsoil.
Thus, it is unclear whether the above-discussed nationality restriction would apply
to the use of the seabed or subsoil in the EEZ
that does not involve product sharing.
the natural resources, whether living or
non-living, of the waters superjacent to the
seabed and of the seabed and its subsoil,
and with regard to other activities for the
economic exploitation and exploration of
the zone, such as the production of energy from the water, currents and winds."123
Other states enjoy freedom of navigation,
overflight, freedom to lay submarine cables
and pipelines, and other related acts that
are internationally recognized as lawful uses
of the sea.124 Further, under the Philippine
Constitution, the subsoil or seabed in the
EEZ are not considered lands of public domain because they are not within Philippine
territory. Thus, they are not considered a
natural resource, which are reserved for
Philippine nationals. Given the foregoing,
a law or regulation allowing non-Philippine
nationals to explore, develop, and utilize the
subsoil or seabed in the EEZ may be seen as
constitutionally sound. At present, however,
there is no such law or regulation.
Under the United Nations Convention on
the Law of the Sea (UNCLOS), the Philippines
does not have ownership or sovereign rights
over the subsoil or seabed of the EEZ. It only
has sovereign rights in respect of "exploring
and exploiting, conserving and managing
Notably, a provision in the template OSWESC provides that the contractor will
have the right to conduct Wind Energy
Operations within the contract area.125 Such
operations would include the construction
of machines or other related equipment that
119 Department of Energy Circular No. 98-03-005 [hereinafter referred to as "EO 462 IRR"].
120 EO 462, Section 2.
121 EO 462 IRR, Section 10 and Section 4 (w).
122 EO 462 IRR, Section 4 (w).
123 UNCLOS, Article 56(1)(a).
124 UNCLOS, Article 58, states that "[i]n the exclusive economic zone, all States, whether coastal or land-locked, enjoy, subject to the relevant provisions
of this Convention, the freedoms referred to in article 87 of navigation and overflight and of the laying of submarine cables and pipelines, and other
internationally lawful uses of the sea related to these freedoms, such as those associated with the operation of ships, aircraft and submarine cables and
pipelines, and compatible with the other provisions of this Convention…".
125 See Annex F, Section 2.1 (gg) "Wind Energy Operations" shall include Wind Energy exploration, development, production, and utilization, including the
construction, installation, operation and maintenance of Wind Energy Systems to convert Wind Energy to electrical power and the transmission of such
electrical power and/or other non-electrical uses. Omnibus Guidelines Governing the Award and Administration of Renewable Energy Contracts and the
Registration of Renewable Energy Developers, DOE Department Circular No. DC2019-10-0013, October 1, 2019.
