Government to conclude talks on Malampaya stake

The government expects to wrap up talks with the consortium led by Korean Gas Corp. (Kogas) for the negotiated sale of a 4.9 percent stake held by the state-owned PNOC-Exploration Corp. (EC) in the $4.5-billion Malampaya natural gas project, the country’s top energy official said.

"We are already in the final stages of our negotiation with Kogas.  We expect to come up with a final arrangement in the next few weeks," Energy Secretary and Philippine National Oil Co. (PNOC) chairman Vincent Perez said.

Perez said the consortium is currently in the end stages of its due diligence on Malampaya.

EC, a PNOC subsidiary, holds a 10-percent stake in the Malampaya project, which is controlled by multinationals Shell Exploration B.V. and Texaco Corp. each with a 45- percent ownership.

The oil exploration firm is selling 4.9 percent of its total 10-percent stake to pay for the loans used to acquire the said stake in the Malampaya project. The remaining 5.1 percent will still be owned by EC.

EC had borrowed some $175 million to buy the 10-percent stake in the Malampaya project. By the time the government decided to sell portion of the EC’s stake, the value has gone up to about $206 million due to interests.

As part of the privatization plan, EC has also created a new subsidiary, PNOC-Malampaya Production Corp. (PNOC-MPC), that will absorb its 10-percent share in the Malampaya project and some $175 million worth of loans. 

A small portion of EC’s shares was already listed at the stock market since the early 70’s although these shares are not actively traded.

The natural gas in Malampaya off the northern coast of Palawan could yield about three trillion cubic feet of gas that could be used to fuel up to 3,000 megawatts of electricity for 20 years, which is equivalent to more than half of the electricity requirements of Luzon even during peak hours.

The government and the local unit in Palawan were projected to receive $30 billion in revenues out of royalties and fees from the Malampaya project during the duration of the 20-year contract.