Arroyo administration eases up on plan to sell PNOC-EC stake in Malampaya

MANILA, Philippines - The Arroyo administration will no longer push for the privatization of PNOC-Exploration Corp., the oil and gas development arm of state-owned Philippine National Oil Co., Energy Secretary Jose Ibazeta said. “That can no longer be privatized now.

And that will be up to the next board’s prerogative to do what they want,” Ibazeta pointed out on plans to privatize PNOC-EC.

There were speculations the sale of a majority 60-percent stake of PNOC-EC’s holdings in the Malampaya natural gas project would be pushed in the remaining days of the Arroyo administration after a board overhaul in a recent stockholders’ meeting.

The previous board of PNOC-EC was openly opposing the sale of the company’ shares as it deemed it as a “midnight sale,” thus making it disadvantageous to the government.

PNOC controls 99.78 percent of PNOC-EC while the remaining stake is listed at the country’s local bourse.

PNOC-EC plays a vital role in the country’s quest for oil and gas development. It currently owns a 10-percent stake in the Malampaya natural gas field, which fuels three power plants with a combined capacity of 2,700 megawatts. Its share in the project provides a steady revenue flow to the government in the form of royalties.

Former PNOC-EC chairman Crismel Verano earlier said the government’s plan to privatize the asset, which it valued at P16 billion, was tainted with lack of transparency after the Department of Finance (DOF) pushed for its sale through a negotiated bid instead of a public bidding and with only a few weeks left in the current administration’s term.

But Ibazeta dismissed this allegation, saying such was just a suggestion by the DOF as a possible way of plugging the deficit.

“So that will have to be decided by the next board on how they would do it,” he said.

Despite these issues, PNOC-EC management remains optimistic about the prospect of the company in the coming years.

In fact, PNOC-EC president Rafael del Pilar said they would be jacking up their capital expenditure budget for the company to P6.2 billion this year from about P5 billion the previous year.

He said the higher capex for 2010 will enable them to pour in more for the drilling of Malampaya’s additional well.

He said there are additional drillings at the $4.5-billion Malampaya deep water gas-to-power project to look for more gas reserves in the area.