Sale of gov’t stake in Malampaya still open

The government is not closing its doors for other investors in the sale of a 4.9 percent stake in the $4.5-billion Malampaya deepwater gas-to-power project, a ranking energy official said.

"While we are having talks with a South Korean consortium, the door is still open to interested investors," Energy Secretary Vincent S. Perez said.

Perez said they are in "advanced discussions" with the Korean group led by Korean Gas Corp., one of the largest buyers of liquefied natural gas (LNG) in the region. "But. "I can’t determine whether this negotiations will be successful or not or whether the price (the group will be offering) will be acceptable to the government."

The government has a 10 percent stake in the Malampaya project through PNOC-Exploration Corp., an oil and gas exploration subsidiary of state-owned Philippine National Oil Co. (PNOC). PNOC will only sell 4.9 percent of its 10 percent stake in the project. Proceeds from the sale will be used by PNOC to refinance portion of the loan used to purchase the Malampaya stake and for EC’s capital expenditures particularly on oil and gas exploration ventures.

The energy official stressed that definitely, the government will not sell below the acquisition price of the stake."

Perez, also the PNOC chairman, said after two biddings for the PNOC-EC stake, only the Korean group signified interest to bid for the shares.

"On March 11, 2004, the group reconfirmed their interest to enter into negotiations bid for the PNOC-EC shares," Perez said.

"We have done two bidding processes. Under Philippine rules, after two failed bids, we could enter into negotiated bids," he said.

He said he was initially hesitant to sell the EC shares which is why they decided keep half of the stake. "I think we are sending the right messages that while we want the government to use the proceeds of the sale to pay off debts, we are retaining the 5.1 percent to allow us to continue to enjoy the potential of the project," he said.

Aside from Kogas, the consortium also includes Seoul City Gas, LG International Corp. and Daesung Industrial Co. Ltd.

The Malampaya natural gas fields are being operated by a consortium led by the Royal Dutch/Shell group’s Shell Petroleum Exploration B.V. and US oil major Chevron/Texaco. Malampaya, located in the South China Sea off the island of Palawan, is the largest single energy project in the Philippines.

PNOC-EC has formed and transferred its 10 percent interest in Malampaya and all its related debts to a new subsidiary PNOC Malampaya Production Corp. (PMPC).