PNOC eyes bonds to fund naphtha plant

State-owned Philippine National Oil Co. will pursue plans to float bonds or borrow from international financial institutions to fund the PNOC-Petrochemical Development Corp.’s 34-percent equity in the proposed $600-million naphtha cracker plant, PNOC chairman Sergio Apostol said yesterday.

"We are thinking of a bond flotation for the naphtha cracker, or we might borrow," Apostol said.

Apostol would not give any details, saying they are still holding talks with various groups. "It is very preliminary," he said.

The previous PNOC management had plans of floating some $300 million to finance their naphtha cracker project.

The PPDC, a wholly-owned subsidiary of PNOC, is exploring talks with at least 11 foreign and local investors to take up the remaining 66-percent share in the cracker plant project.

Based on the plan, 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.

PPDC president Jose Gangan said earlier that JG Summit Holdings Corp., the investment arm of the Gokongwei family, is planning to join the talks for this project. JG Summit earlier indicated a plan to put up its own naphtha plant since it runs a polypropylene plant in Bataan.

A naphtha cracker plant will manufacture raw materials that can be used by polypropylene and polyethylene plants.

Aside from JG Summit, other firms that have indicated interest in joining the PPDC’s cracker plant project are: Petron Corp., Petrocorp, Bataan Polyethylene Corp., Philippine Resins Industries Inc., D & L Indsutries, RP Amoco, Sumitomo Corp., Mitsubishi Corp., Mitsui and Co., Itochu Corp. and Marubeni Corp.

Gangan said the agreement for the cracker plant is expected to be signed in the middle of the year.

The PPDC official said negotiations are ongoing between the naphtha proponents and Shell Philippines Exploration (Spex) about the possibility of obtaining part of the proposed cracker’s feedstock from the condensate production of the Malampaya offshore field.

The Malampaya field, which is being developed by a consortium led by Spex, will be commercially operational by October this year. It is expected to produce 20,000 barrels of condensate per day. The field has proven condensate reserves of 85 million barrel.

The field can supply 40 percent to 45 percent of the cracker’s feedstock requirement. – Donnabelle Gatdula