RP eyes Brunei as partner for naphtha project

The government is looking at the possibility of forging a joint venture with Brunei for the development of the first naphtha cracker plant in the country, Energy Secretary Vincent Perez said yesterday.

Perez said this is one of the possible items in the agenda being worked out for President Arroyo’s state visit to Brunei next week. He said they are working out the details with their counterparts from Brunei.

The energy secretary said they are looking at the possibility of a 50-50 joint venture.

"President Arroyo will discuss it with them (Brunei government)," said Perez who went to Brunei yesterday to make arrangements for the state visit. Perez was accompanied by Philippine National Oil Co. president Thelmo Cunanan and PNOC-Petrochemical Development Corp. (PPDC) president Jose Gangan.

PPDC, a wholly-owned subsidiary of state-run PNOC, is taking the lead in the development of a naphtha cracker plant in the country and is willing to take up a 34-percent stake in the project.

It was reported that PNOC is having a hard time convincing prospective investors because most of them are waiting for the final draft of the implementing rules and regulations (IRRs) of the newly-enacted Electric Power Industry Reform Act that will spell out the "rules of the game."

The supposed investors of the naphtha cracker plant have expressed concern over certain issues such as the sustainability of energy in this sector and the tariff to be slapped on imported raw materials.

But Perez said they would present all the prospects of this project to the Brunei government and they hope that they can get a favorable response.

PNOC recently announced that it is scouting for strategic joint venture (JV) partners for the $600-million naphtha cracker plant. Aside from the Brunei government, the PNOC had recently explored talks with China Petroleum Corp. and Gokongwei-owned JG Summit Holdings Corp.

The PPDC had negotiations with at least 11 prospective foreign and local investors to take up the remaining 66-percent share in the cracker plant project. These include: Petron Corp., Petrocorp, Bataan Polyethylene Corp., Philippine Resins Industries Inc., D & L Industries, RP Amoco, Sumitomo Corp., Mitsubishi Corp., Mitsui and Co., Itochu Corp. and Marubeni Corp.

PPDC will take the lead in establishing a cracker plant with a capacity of 600,000 to 700,000 tons per year to be operational by 2004 or 2005.

Naphtha cracker plant will manufacture raw materials than can be used by polypropylene and polyethylene plant. – Donnabelle Gatdula