Citibank to handle sale of PNOC-EC stake

Philippine National Oil Co. (PNOC) has commissioned Citibank N.A. to handle the sale of 60 percent of its shares in its oil and gas exploration subsidiary PNOC-Exploration Corp. by end of 2007 or early 2008.

PNOC president Antonio Cailao told reporters that the buyer of the PNOC-EC stake will gain control of the firm’s 10 percent equity in the $4.5-billion Malampaya deepwater gas-to-power project in Palawan.

“We have hired a financial advisor, Citibank, for the privatization of PNOC-EC which may be held in December or January next year,” Cailao said.

PNOC-EC holds a 10 percent stake in Service Contract 38, the consortium that developed the Malampaya gas field. Other stakeholders are Shell Philippines Exploration B. V. (Spex) and Chevron-Texaco, equally holding 45 percent.

In 2000, Citibank arranged a $130-million loan for PNOC to finance its participation in the Malampaya project.

PNOC is still determining what privatization scheme to use for PNOC-EC shares. Among the modes being looked at are a secondary public offering at the stock market, strategic sale and private placement.

PNOC-EC earlier pointed out that an additional public offering is timely due to the bullishness of the Philippine stock market and a favorable outlook by international and domestic investors.

The issuance of additional shares takes four to six months to complete, the company said.

The public offering will increase PNOC’s liquidity thereby increasing the value of PNOC-EC’s shares. PNOC-EC listed 0.22 percent of its shares at the stock exchange in April 1976, leaving 99.78 percent or 1.99 billion shares yet to be listed.

“An additional public offering is a mode of sale for companies already listed on an exchange such as PNOC-EC, which will allow the company and its shareholders to raise funds through the capital markets,” it said.

PNOC-EC said its privatization will help generate funds for its various projects such as the development of the Camago-Malampaya oil leg (also known as the Malampaya oil rim); the development and oil and gas exploration in offshore Mindoro and Ragay Gulf; oil and other exploration projects; development of natural gas downstream infrastructure projects; coal project in Indonesia; and development of its coal mine-mouth power plant project in Isabela.

The oil exploration firm’s privatization will also generate funds for the National Treasury.