Spex, Chevron mull PNOC-EC stake in Malampaya project

MANILA, Philippines - Shell Petroleum Exploration B.V (Spex) and Chevron, the lead operators of the Malampaya natural gas project, are still studying if they would exercise their right of first refusal for the sale of PNOC-Exploration Corp.’s shares in the project.

Spex and Chevron are the two major participants in the $4.5-billion Malampaya deep water gas-to-power project with a 45-percent stake each. The remaining 10 percent is owned by PNOC-EC, a substantial block of which it intends to privatize anytime soon.

“There are conditions in terms of the sale such as right of first refusal,” Shell country chairman Edgar Chua said.

But he said the sale may be pushed back pending the entry of a new political administration.

“I understand that the current (Arroyo) administration may not push through with the sale. With eight days left, I don’t know whether there’s sufficient time. So I guess for the moment, we just have to wait whether they will indeed sell the shares – whether an asset sale or a company sale,” he said.

Asked if they would be willing to participate in the privatization of PNOC-EC, Chua said: “Let me put it this way, we have the right for first refusal, as per our contract. The interest will be determined by, for instance, the terms and conditions of the sale. Until such time it is clear, we cannot say either way,” he said.

Energy Secretary Jose Ibazeta earlier said the Arroyo administration may no longer push for the privatization of PNOC-EC, the oil and gas development arm of state-owned Philippine National Oil Co. (PNOC).

“That can no longer be privatized now. And that will be up to the next board’s prerogative to do what they want,” Ibazeta said, when asked about the planned PNOC-EC privatization.

There were speculations the selloff of the PNOC-EC shares would be pushed by the government in the remaining days of the Arroyo administration after it overhauled its board in a recent stockholders’ meeting.

The former board of PNOC-EC was openly opposing the sale of the company’s shares as they deemed it as “a midnight sale,” thus disadvantageous to the government.

PNOC controls 99.78 percent of PNOC-EC while the remaining stake is listed at the local bourse.

PNOC-EC plays a vital role in the country’s quest for oil and gas development.

At present, the Malampaya natural gas field fuels three power plants with a combined capacity of 2,700 megawatts. Its share in the project gives a steady revenue to the National Government in the form of royalties.

According to former PNOC-EC chairman Crismel Verano, the government’s plan to privatize the asset, which it valued at P16 billion, was tainted with lack of transparency after the Department of Finance (DOF) pushed for its sale via a negotiated bid instead of a public bidding and with only a few weeks left in the current administration’s term.

But Ibazeta dismissed this allegation, saying that “it was just a suggestion by the DOF as possible way of plugging the deficit.”

“So that will have to be decided by the next board on how they would do it.”