PNOC to start formal talks for sale of Malampaya project

The Philippine National Oil Co. (PNOC) will soon start formal negotiations with a foreign company for the disposal of PNOC-Exploration Corp.’s (EC) interest in the $4.5-billion Malampaya natural gas project.

"The PNOC board has directed the privatization committee to begin talks with the lone bidder for the privatization of PNOC-EC’s stake in Malampaya," PNOC president Thelmo Cunanan said.

Cunanan did not identify the company but said it was among the four firms that previously wanted to sign with the state-run agency, a confidentiality agreement related to the proposed sale.

PNOC late last year conducted a roadshow in Thailand, Indonesia, Japan and Korea to pitch for the privatization of PNOC-EC.

During the campaign, Indonesian and Thai government-run companies, Pertamina and Thai National Oil expressed interest in the privatization program for PNOC-EC.

The sale of the 49 percent of EC’s 10-percent stake in the Malampaya project is valued at about $300 million. The remaining 51 percent will still be owned by EC. Under its initial privatization scheme, EC created a subsidiary, PNOC Malampaya Production Corp. (PNOC-MPC), that will absorb its 10-percent share in the $4.5-billion Malampaya project and some $175-million worth of liabilities. A portion of EC’s shares was listed in the stock market in the early 1970s but was not actively traded.

Cunanan said that Hong Kong-based CLSA, an affiliate of investment bank Credit Lyonnais and EC’s financial advisor, has not yet determined if PNOC will push through with an initial public offering (IPO) instead of a strategic sale.

"We are still waiting for the guidelines from the Department of Finance. But at this point, a sale is more feasible since several parties have shown interest in the planned sale," Cunanan said.

CLSA handled the first phase of the privatization process which primarily involved assets valuation.

On the other hand, ING Barings was appointed as EC’s global coordinator for the second phase of the company’s privatization process. ING Barings will recommend the privatization methods to be used and serve as the underwriter for the offering.