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Subic Bay Naval Station
14°50'N 120°14'E

Philippines authorities should take over a major shipyard that sits on the site of a former U.S. navy base, or risk letting it fall into the hands of the Chinese who could use it as a regional foothold amid contentious South China Sea claims, Filipino officials said 24 January 2019. Defense Secretary Delfin Lorenzana said he had met with President Rodrigo Duterte and other officials on Wednesday, including Foreign Secretary Teodoro Locsin, to discuss ways for the Philippines to take over the facility in Subic Bay from its failing South Korean operator and keep it in local hands.

A state-run company is among two Chinese firms that have expressed interest in taking over the shipyard after South Korea’s Hanjin Heavy Industries and Construction filed for bankruptcy last week, according to local media reports. Manila was also studying the prospect of offering the shipyard operations to players from the United States, Australia, South Korea and Japan – countries that are all considered as allies by the Philippines, the defense chief said.

“The Philippine Navy suggested that ‘why not the Philippines take over so that we’ll have a naval base there? Then we’ll have ship-building capabilities,’” Lorenzana said during an annual event in Manila of the Foreign Correspondents’ Association of the Philippines. He said Manila was looking to purchase more ships in the next decade, and it would be advantageous for it to have the shipyard under its control.

“The most critical external security challenge for the Philippines is the territorial and maritime claims in the South China Sea,” Lorenzana said. “Compounding the issue is the backdrop of a rapidly evolving regional environment, where the United States-China geopolitical rivalry is deepening and a potential Taiwan Strait conflict is brewing.” He noted that Washington remained the Philippines’ “only treaty ally” despite Duterte’s military pivot to China since he became president in mid-2016.

Hanjin Philippines, the local unit of South Korea’s Hanjin Heavy Industries and Construction, filed for rehabilitation after it defaulted on some U.S. $400 million in loans, reports said. The firm also owed about $900 million to creditors in South Korea. Two unnamed major Chinese shipbuilders have expressed interest in taking over the failed shipyard in Subic, which would effectively allow Beijing to gain a strategic foothold into the Philippines, its territorial rival in the South China Sea, critics said.

Supreme Court Justice Antonio Carpio, who was part of the Philippine legal team that argued the arbitration case in 2016, warned that China was moving to occupy areas, even including shorelines. “The intention of China is very clear. They want to control the West Philippine Sea,” Carpio said, using the Philippines name for the South China Sea. He said Beijing was still intent on “grabbing” Manila’s exclusive economic zone, despite international condemnation.

The 12-15 June 1991, eruption of Mount Pinatubo volcano, located 100 kilometers northwest of Manila in the Philippines, was the largest eruption in the past five decades and led to the largest recorded evacuation of people due to a volcanic threat. US forces left the Philippines after Mount Pinatubo erupted, forcing American service members and families to flee and smothering Subic Bay and Clark Air Base under tons of volcanic ash and debris. The cataclysm essentially ended the US military presence. US forces abandoned Clark Air Base and Subic Bay Naval Base after the Philippine government voted not to renew a basing agreement in 1992.

The Philippine Senate rejected the newly negotiated base agreement and set in motion a total US withdrawal. In late December 1991, after several months of discussions on the possibility of an extended withdrawal agreement, the Philippine Government notified the United States that in accordance with the treaty, US forces must be withdrawn from Subic Naval Base and Cubi Point Naval Air Station by the end of 1992. The high value of the Subic/Cubi Point facility was its geographic location and the availability of all major training and logistics functions at a single site.

Roughly 4,100 of the some 5,900 military billets at Subic were disestablished. Many of these were positions that supported the base infrastructure (for example, personnel who worked in the Naval Supply Depot or Naval Magazine) and were no longer necessary. Some of these personnel drawdowns would have occurred as a part of the Phase II reductions even if the Philippine Senate had approved the long-term agreement negotiated with the Philippine Government. Of the remainder, some 1,200 military personnel from Subic transfered to Guam. That move included VRC-50 (the airborne logistics support squadron for the Seventh Fleet), Naval Special Warfare Unit One (SEALs), Explosive Ordnance Disposal Unit Five, and personnel from a number of other units such as the Ship Repair Facility and the Naval Hospital.

The US -Philippine security relationship has evolved since the withdrawal of US military bases in 1991-92. The US is gradually establishing a post-bases relationship that is consistent with US activities elsewhere in the region -- exercises, ship visits, exchanges, and policy dialogues. Upon ratification by the Philippine Senate, the January 1998 Visiting Forces Agreement, which lays out the legal status of US defense personnel temporarily in the Philippines in connection with official duties, facilitated expanded military cooperation. The new agreement reaffirms obligations established under a US-Philippine mutual defense treaty signed in 1951 that requires the United States to help defend the Philippines should it be attacked. It provides legal protections for DoD personnel serving in the Philippines and their hosts. It requires US service members to respect Philippine laws and to abstain from activities inconsistent with the spirit of the agreement. The Philippine Senate's ratification of the Visiting Forces Agreement with the United States allowed US Navy ships to visit Manila.

Subic Bay on the island of Luzon is approximately 4 n mi wide and 9 n mi long. The entrance to Subic Bay opens seaward to the southwest and Grande Island, located in the mouth of the bay, divides the entrance into two channels. The main channel, lying to the west of Grande Island is wide, deep, and clear of obstructions.

Port Olongapo consists of an outer harbor and an inner basin. The port complex is approximately 1 1/2 miles wide between Cubi Point and Kalaklan Point and extends about 1 1/2 miles eastward to the coast. The inner basin lies between Maritan Point and Rivera Point, with the Naval Supply Depot terminal pier extending from its northeast shore. The shore is extremely steep-to with little shoaling effect (the building in magnitude of waves when the water depth reaches one-half their wavelength) extending beyond a quarter mile offshore. When Subic Bay was a US Navy installation, all facilities were available for assignment to US Navy vessels.

There are 6 wharves and 2 piers which serve as primary berthing spaces for vessels entering the Port Olongapo complex. There are also 13 supplementary berths which are used for small craft only. There are more than 160 anchorages in water depths of 70 to 150 ft with soft mud or coral bottom in Subic Bay. Mooring buoys for all sizes of ships are available and assigned by the Port Operations Officer.

Analysts classifying Subic Bay as a typhoon haven have done so with certain reservations or qualifications. It is true that many ships have successfully weathered the numerous typhoons which have affected Subic Bay. However, it is also a fact that Subic Bay has never really been tested by the passage of a truly severe tropical cyclone. Those storms whose eyes have crossed directly over Subic Bay have been relatively weak storms; in the case of severe tropical cyclones the eyes have only come close, with the strongest winds missing Subic Bay by 50-100 n mi, and the remaining winds being further reduced by the topography of the surrounding terrain. The highest sustained wind recorded during the period 1955-1973 was 56 kt. The sheltering effect provided by the surrounding terrain qualifies Subic Bay as a much safer port in heavy weather than Hong Kong, Kaohsiung, or Chilung (Keelung). However, large combatants (CVA, cruisers, etc.) would find the relatively small size of Subic Bay restrictive. The cost in terms of time and money of evasion would be small since the evasion routes are short and direct.