Good time for Malampaya divestment

If the Philippine National Oil Co. (PNOC) subsidiary PNOC Exploration Corp. delivers on its promise that it will complete the deal soonest, then government could get a shot in the arm with the anticipated privatization of a portion of PNOC-EC’s stake in the Malampaya natural gas project.

It will be recalled that the Malampaya project is the first major offshore oil and natural gas exploration and development in the country. Shell and Chevron Texaco split 90 percent of the total interest in the project which sits some 80 km northwest of Palawan, PNOC-EC has 10 percent.

Industry leaders are hoping that the PNOC-ED partial divestment of its stake in the project could proceed unhindered. They are hoping that this could dispel a growing perception that the energy sector just could not get its privatization program off the ground: the National Transmission Corp. (Transco) project is stalled while the Masinloc project continues to be hounded by persistent questions on the capability of the winning bidder. Only the sale of some minor generation assets have been concluded. And their proceeds are nowhere near the government’s target revenues.

There is a lot of optimism on the Malampaya partial divestment. And for many good reasons. The process has been going on for more than two years now, and so observers believe that if there are any questions on the soundness of the partial divestment, they must have been answered already. The proceeds of the partial divestment will be used to fund future oil and gas exploration activities in the country. With money in the bag, PNOC will not have to borrow to fund such activities.

Also, the optimism is spurred by the fact that the prospective bidder is a recognized global giant and could perhaps withstand the most stringent scrutiny by the Senate.

Much of the optimism is anchored on the person on whose shoulders the successful conclusion of the partial divestment rests: PNOC EC president and CEO Eduardo V. Mañalac. Ed, who traces his roots to Sorsogon, is a seasoned geologist who is highly respected in the international oil exploration industry. He was a very senior executive of now Houston-based Conoco Phillips Petroleum Co. when he was spotted by outgoing Energy Secretary Vince Perez. It was Vince who asked him to make a sacrifice and join government, which Ed did in March of 2003 as Energy Undersecretary.

With 30 years experience in petroleum exploration and production tucked under his belt, Ed is expected to provide the needed expertise and credibility that could ensure that this one privatization project could reach the finish line.

Ed has been quick to clarify that the PNOC EC is not giving up its entire participating stake in the project. It is a partial divestment: only 49 percent of the company’s 10-percent interest is up for privatization.

He also made it clear that PNOC EC has no option but to undertake the divestment. It is a condition set by the government resulting from a credit facility from Citibank that it guaranteed some years back. The facility was what PNOC EC used to buy its original 10-percent stake. So, not to partially divest is to violate that condition.

The PNOC EC has not made any official announcement, Ed has underscored that the process is nearing completion, but not quite. But already, regional bourses are abuzz with speculations that a giant South Korean consortium is keen on bagging the 49 percent stake.

If speculations are true, then there could be a credible buyer. Stock market sources have identified the consortium as the LG International-led group joined by Korea Gas Corp., Seoul City Gas Corp. and the Daesung Group. The biggest entity in this group is easily Korea Gas which reportedly has a market capitalization of $2.4 billion. The company is reputedly the largest importer of liquefied natural gas in the world. It is also the South Korean’ government’s monopoly producer and supplier of natural gas throughout that peninsula. The rest of the group has a combined capitalization of approximately $800 million.

With such resources, industry leaders say the LG group will definitely not be holding office in Pedro Gil beside a recruitment agency. That is said with levity, of course.

There are also speculations that the LG consortium just might be acceptable to the two major stakeholders — Shell and Chevron Texaco. It is not confirmed, but some industry insiders say that one or two members of the consortium already have joint projects of sorts with either Shell or Chevron Texaco in Asia and other parts of the world.

The energy industry is reportedly eagerly, awaiting the successful conclusion of this partial divestment by PNOC EC. With this comes that hope that a possible deal with the LG group would open the doors wider for more Korean investments in other energy-related fields in the country. And the hope that the energy sector’s privatization program could finally be perceived as ‘getting off the ground,’ a signal the country badly needs to send to the international community. This is a success everyone of us will share.

Continuing Urban Bank saga

We heard that former Urban Bank president Teodoro Borlongan has filed a motion for reconsideration of the Supreme Court’s resolution denying his earlier petition concerning the falsification case against certain officials of the Bangko Sentral ng Pilipinas.

In his motion, Teddy alleged that BSP officials falsified reports used to close down Urban Bank. He pointed out that five out of five cases relating to Urban Bank’s closure and filed before the SC within a period of one year ended up in the same third division which experts say is statistically improbable.

We hope the Supreme Court as soon as possible will settle this issue to clear all doubts regarding the case.

Doing it in style

The twin Manansala towers in Rockwell are 98 percent completed. We heard that the remaining two percent merely involves the finishing touches on the Lopez family’s latest signature project that now forms part of the famous Rockwell skyline.

With formal handover set to be conducted in a little over 90 days from today, the company led by the indefatigable trendsetter Rockwell president Tong Padilla is now busy orienting a — get this — ‘handover team’ to ensure the smooth and professional handover to excited Manansala unit owners. It is another example of the style and class many have come to associate with Rockwell.

It is no secret that Rockwell has become the benchmark for upscale property development and marketing in this country. They were the first to market their projects in the US which saw other local property developers following suit.

Just last year, the loft-type units at the Joya, Rockwell’s current project-in-the making, were introduced. And as all of Rockwell’s loft units were subsequently sold out, some officials claim that another company has pirated the concept by designing and trying to build a similar project.

Officials said that unfortunately for the buyers of this latter project, the much-hyped views that their new units will enjoy will be short-lived. They revealed that Rockwell Land is drawing up plans for another residential tower, this time right in front of the Philtown development, the corners of Estrella and Lopez drive. We’re looking forward to the new trend-setting concept Tong Padilla will unveil this time.

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