PNOC-EC assures transparency in sale of its Malampaya stake

The Philippine National Oil Co.-Exploration Corp. (PNOC-EC) said yesterday the anticipated sale of 49 percent of its 10-percent interest in the Malampaya natural gas exploration and development project "has followed a strict and transparent process".

PNOC-EC president and chief executive officer Eduardo V. Mañalac also said the prospective sale price "will be made public in due time", adding that a "premature disclosure could unduly prejudice the divestment process".

Mañalac said the prospective sale price could not yet be disclosed "because the two other service contractors – Shell Philippines Exploration BV (SPEX) and Chevron-Texaco Malampaya Ll. (CTMLL) – are now in the process of reviewing the offer and will have to consider whether or not to match it".

It is best for SPEX and CTMLL to weigh their options without the cacophony of public speculation, he pointed out.

A South Korean consortium led by LG International is poised to acquire close to half of PNOC-EC’s participating interest in the project. Regional giant Korea Gas Corp., Seoul City Gas Co., and Daesung Industrial Corp. join LG in the consortium.

Mañalac earlier clarified that the National Government’s 60-percent annual share in the net revenues of the current consortium of service contractors "will not be affected by PNOC-EC’s partial divestment".

The possible entry of a minority fourth group into the consortium has no bearing at all on earnings of the government from this project, he underscored.

Mañalac also pointed out that the partial divestment process "has been going on for over two years under the strict oversight of the Cabinet-level Committee on Privatization".

Despite the long-drawn process, Mañalac explained that the prospective sale to the LG consortium "is not yet a done deal". We have to wait for the next move by SPEX and CTMLL " he said.

SPEX and CTMLL have 15 days to exercise their preemptive rights, Mañalac explained.

Mañalac also expressed confidence that the prospective sale price "will be reasonably profitable for PNOC-EC". The offer has been the subject of a long negotiation process and will be weighed against the valuation of the interest and other key factors, he added.

PNOC-EC is selling part of its Malampaya stake in compliance with a National Government condition set in 1999 for a sovereign guarantee on a $175-million credit facility from Citibank which was used to acquire the 10-percent stake.