PNOC unit may raise stake in Petrocorp

The PNOC-Petrochemical Development Corp.(PPDC) is looking at the possibility of increasing its stake in Petrochemical Corp. of Asia-Pacific (Petrocorp) to 40-45 percent, from 10 percent, in line with the effort to intensify the mid-stream petrochemical industry.

A reliable source told The STAR that the PPDC is now talking with an American petrochem firm from the "West Coast" to be its strategic partner in reviving the ailing Petrocorp.

The source, however, said PPDC would prefer that a new company be formed to absorb the debts of Petrocorp.

Aside from PPDC’s 10-percent equity, Petrocorp, a leading manufacturer of polypropylene resins or plastic by-products, is 30 percent owned by Chemphil; Polyolefin Holding (17 percent); International Polymer (10 percent); Thai Petrochem (10 percent) and others (23 percent).

PPDC president Jose Gangan, in a separate interview, said reviving the operations of the companies in the mid-stream petrochem industry like Petrocorp and Bataan Polyethylene Corp. (BPC) will pave the way for the development of the upstream industry which calls for the construction of the $1.2 billion naphtha cracker plant.

"There is a need to focus and put these companies back on their feet and make them profitable again before a construction of a naphtha cracker plant can be realized," Gangan said.

Before this move, PPDC has been scouting for a potential joint venture partner for its two-phase naphtha cracker project which will be located in PPDC’s 530-hectare petrochemical park in Bataan. A detailed feasibility study for the cracker plant was completed in December 2002. The plant, which is expected to have a capacity of 450,000 to 600,000 metric tons a year, will manufacture raw materials needed to make plastic products. Without the cracker facility, the country remains dependent on imported raw materials for the petrochemical industry.

Sources said the BPC, owned by British Petroleum, Sumitomo and Bataan PE Holdings, is being revived by the Gatchalian group. In December last year, Petronas of Malaysia had divested its 39-percent stake in BPC.

Land Bank of the Philippines is the major lender of Petrocorp while BPC’s foreign financial partner is International Finance Corp., the investment arm of the World Bank.

According to Gangan, Land Bank will decide what debt restructuring scheme to adopt (whether to put up a new company or revive operation) and who will be allowed to restructure Petrocorp.

If Land Bank will approve it, Gangan said they hope to seal a deal with the foreign partner in the first quarter of 2004. – Donnabelle Gatdula