Balabac: where geography, geology and strategy converge

 Beyond military geography, Sabah’s northern maritime frontier has an energy dimension.

From Samirul Ariff Othman

In an earlier discussion of Balabac, I argued that Malaysia should neither overreact to military developments on the Philippine island nor dismiss them simply because relations with Manila are good.

Balabac is one of nine Philippine locations covered by the Enhanced Defense Cooperation Agreement (EDCA) with the US, but it remains a military facility under Philippine control. There is little reason to suggest that the Philippines is preparing to threaten Sabah.

The larger question is whether Malaysia sufficiently understands the strategic geography taking shape immediately north of Sabah. There is another dimension to that geography. It lies beneath the sea.

The geography beneath the geography

The waters between northwest Borneo and southwest Palawan form part of a wider geological environment associated with the Baram-Balabac petroleum province. Offshore Sabah is a mature and commercially important hydrocarbon region.

West Balabac, by contrast, remains a frontier exploration area.

The two should not be treated as identical. But neither should their geological relationship be ignored.

The Baram-Balabac Basin is a recognised geological province associated with the northwest Borneo margin. Its petroleum systems have produced substantial oil and gas discoveries offshore Sabah, while geological studies indicate related structures extending northwards towards the waters southwest of Palawan.

The Philippine authorities themselves recognised this possibility.

Service Contract 59, or SC59, covers approximately 14,760 sq km west of Balabac Island. The block was awarded to PNOC Exploration Corporation in 2006 and subsequently explored with the involvement of BHP Billiton, which attracted attention partly because of its proximity to successful Malaysian deepwater discoveries.

Philippine petroleum assessments have acknowledged the possibility that West Balabac shares elements of the petroleum system found farther south.

The distinction is important. It does not mean Malaysia and the Philippines are sitting above a single proven oilfield divided by a maritime boundary.

Nor does it establish commercially recoverable reserves in West Balabac.

Geology does not respect political borders, but geological continuity is not the same thing as proven reserves.

The Malaysian side is considerably more developed.

Offshore Sabah contains producing fields, platforms, pipelines and processing infrastructure built over decades. Sabah has historically contributed a substantial proportion of Malaysia’s crude-oil production. Its offshore petroleum economy is therefore not peripheral to Malaysia’s national energy system.

Malikai illustrates the scale of this industry. Located 100km to 110km offshore Sabah, it is Malaysia’s first tension-leg platform and an important deepwater development.

Shell’s 2026 decision to proceed with Malikai Phase 3 will add four producing wells, with production expected to rise from approximately 25,000 barrels per day to around 40,000 barrels per day.

Sabah is also seeking a larger role in the petroleum value chain through greater local participation, technical capability and ownership of producing assets.

The political economy is consequently changing. The question is no longer simply how much petroleum is extracted from Sabah, but how much ownership, capability, employment and economic value Sabah retains from it.

The waters immediately south of Balabac therefore matter economically to Malaysia, independent of any military consideration.

Oil does not explain EDCA

It would be a mistake to draw a straight line from petroleum geology to military developments on Balabac.

There is no persuasive public evidence that Philippine military expansion, or US access under EDCA, is intended to secure West Balabac’s petroleum resources, threaten Malaysian offshore installations or position US forces around Sabah’s oilfields.

The publicly stated strategic logic is more straightforward. The Philippines is strengthening territorial defence and maritime-domain awareness while confronting growing pressure in the South China Sea. Its alliance with the US is central to that strategy.

Malaysia should therefore avoid seeing conspiracies when strategic geography provides a simpler explanation.

Balabac occupies an unusually consequential location. Immediately to its south lies Sabah and an extensive Malaysian offshore petroleum economy.

To its west lies the South China Sea. Around West Balabac lies an underexplored Philippine petroleum frontier. Across the wider region run maritime routes connecting the South China Sea, the Sulu Sea and the waters surrounding northern Borneo.

Military geography, maritime geography and energy geography overlap.

The appropriate Malaysian response is therefore neither protest nor complacency, but awareness.

Malaysia and the Philippines have many common interests. Both face illegal fishing, smuggling, piracy, kidnapping and other transnational threats around the Sulu and Celebes seas. Both have an interest in preventing increasingly crowded maritime spaces from becoming increasingly dangerous ones.

Defence engagement, maritime dialogue and transparency should therefore accompany developments around Balabac.

The energy dimension provides another reason for cooperation.

SC59 remains an exploration frontier. But exploration frontiers can change. A significant commercial discovery in West Balabac would alter the economic geography of the area.

Platforms, drilling vessels, subsea installations and support vessels could eventually join military, coastguard, fishing and commercial traffic. Maritime-domain awareness would then become not merely a defence requirement but an economic-security requirement.

Malaysia has every reason to understand that environment before circumstances compel it to do so.

3 maps, 1 problem

A political map shows Malaysia ending at one line and the Philippines beginning on the other. A geological map tells a different story. Sedimentary basins continue beneath political boundaries. Petroleum systems follow geology rather than sovereignty.

A maritime map reveals another reality. Shipping routes, fishing grounds and security challenges connect waters that political borders divide. To be strategic we must be capable of reading all three maps simultaneously.

None of this makes Balabac a threat to Malaysia. Nor should American access to Philippine facilities automatically be interpreted as hostile to Malaysian interests. The Philippines is entitled to make its own defence arrangements, just as Malaysia is entitled to assess their implications.

Good foreign policy distinguishes capability from intention, geography from sovereignty, and possibility from evidence.

Malaysia should therefore maintain close communication with Manila, improve maritime-domain awareness around Sabah and protect critical offshore infrastructure without unnecessarily turning a manageable strategic development into a bilateral dispute.

The first lesson of Balabac was that friendship matters, diplomacy matters, but defence is insurance.

The second is equally simple: what lies beneath the sea can sometimes matter as much as what is built on shore. - FMT

Samirul Ariff Othman is a lecturer, international relations analyst and senior consultant. He is also an FMT reader.

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.