Petronas set to firm up equity in naphtha plant

Petroliam Nasional Berhad (Petronas), the largest oil firm in Malaysia, is expected to firm up its equity participation in the Philippines’ first ever multi-billion dollar naphtha cracker plant project in the next few days.

According to Philippine National Oil Co. (PNOC) sources, an investment team from Petronas will arrive in the country before the end of this month or early March to finalize its participation.

Last year, Petronas had expressed a keen interest in acquiring at least 20-percent equity in the first phase of the $600-million cracker project.

Energy Secretary Vincent S. Perez said there was a meeting last Feb. 8 between PNOC and Petronas regarding the naphtha cracker project. "So far, so good," Perez said, describing the last information about he had on the project.

A technical group composed of PNOC and Petronas officials was formed immediately after the two companies signed a memorandum of understanding (MOU) on the drawing up of feasibility studies on the proposed naphtha plant and other projects that Petronas would be willing to invest in.

The cracker project, to be constructed in Mariveles, Bataan, will be led by PNOC subsidiary PNOC-Petrochemical Development Corp. (PPDC).

PPDC plans to set aside at least $100 million (roughly P5.1 billion) to finance its 34-percent equity stake in the project.

PPDC is eyeing a 50-50 debt to equity ratio on the $600-million venture. Thirty-four percent of the equity portion will be assumed by PPDC but the share can still go down to give way for the entry of more private investors.

Most likely, the company said the required investments would be raised through internally generated funds.

Four companies are almost certain to acquire a stake in the project. They are Itochu Corp. of Japan, Bataan Polyethylene Corp., Petrochemical Corp. of Asia Pacific, and the Gokongwei-owned JG Summit Holdings Inc.

Aside from these firms, there are other diversified companies in the region that have expressed serious interest to participate in the project, including the Masshor Group of Companies of Brunei.

PNOC president Thelmo Y. Cunanan said they would be able to firm up the deal with these "serious" investors hopefully within the first quarter of 2002.