PNOC expects to close sale of Malampaya stake in a mo

PNOC-Exploration Corp., the oil and gas exploration subsidiary of state-owned Philippine National Oil Co. (PNOC), expects the financial closure for the sale of its 4.9-percent stake in the $4.5-billion Malampaya project to be completed within a month.

"We hope to have the financial closure with the Korean Gas Corp.(Kogas)-led consortium by April 15," PNOC president Eduardo Mañalac said.

Mañalac said negotiations between PNOC-EC and Kogas are already in the final stages. "The consortium has finished their due diligence. We have already firmed up the terms of the contracts."

But Mañalac said they still have to address concerns raised by of some lawmakers on the sale of the government’s stake in the country’s biggest oil exploration project.

"We had a hearing (yesterday) on the EC privatization. We have to brief the lawmakers of the things we have to do with the EC privatization," he said.

Before closing the deal with Kogas, Mañalac said they also have to secure the approval of the other stakeholders.

"We have to submit the proposed contract to Shell Philippines Exploration B.V. (SPEX) since it has the right of first refusal," he said. "We will probably give them at least two weeks to deliberate," he said.

EC holds a 10-percent stake in the Malampaya project while SPEX and Texaco Corp. own 45-percent stake each.

The oil exploration firm is selling about half of its stake to pay off the loan used to gain participation in the Malampaya project.

EC borrowed $175 million to purchase the 10-percent stake in the Malampaya project. By the time the government decided to sell a portion of EC’s stake, the loan value has gone up to about $206 million due to interests. The remaining 5.1 percent will still be owned by EC.

As part of the privatization plan, EC has also created a new subsidiary, PNOC Malampaya Production Corp. (PNOC-MPC), to absorb its liabilities and share holdings in the Malampaya project.

A small portion of EC’s shares has been listed at the stock market since the early 1970s but are not actively traded.

The natural gas in Malampaya in Northern Palawan could yield three trillion cubic feet of gas that could be used to fuel up to 3,000 megawatts of electricity for 20 years, 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.