PNOC to Sell Stake in Malampaya Project

Four foreign firms have expressed interest in the privatization of the Philippine National Oil Co.- Exploration Corp.'s (PNOC-EC) 10 percent stake in the $4.5 billion Malampaya natural gas project.

PNOC president Thelmo Cunanan told reporters that the government firm's privatization committee has already begun a roadshow to encourage investors to bid for the stake. The roadshow will travel to Jakarta, Indonesia; Tokyo, Japan; Bangkok, Thailand; and Seoul, South Korea.

But he only identified Pertamina of Indonesia and the Thai National Oil as having expressed firm interest in 4.9 percent of the government's 10 percent stake in the project.

Asked if the sale will push this year, Cunanan said: "It depends on those interested. To date, there are four interested companies." Cunanan said PNOC-EC has appointed ING Barings to act as the firm's financial adviser for the sale.

Last year, PNOC-EC's subsidiary, the PNOC Malampaya Production Corp. (PNOC-MPC), was assigned to handle the privatization of the former's 10 percent stake in Malampaya. PNOC-EC's debts amounting to $175 million, which were used to pay for its stake in the Malampaya project, were also transferred to PNOC-MPC.

PNOC-EC invested in the Malampaya project in 1999. Aside from PNOC-EC, key stakeholders in Malampaya include Shell Phils. Exploration B.V. (Spex), the local exploration unit of the Royal Dutch Shell Group (45 percent stake); and ChevronTexaco (45 percent). Government is eyeing at least two modes to privatize its stake in Malampaya -- by offering it to the public through listing at the bourse or selling it to a direct buyer. The sale is expected to generate $400 million for the government.

The Malampaya gas project, the country's only gas field, has reserves of 2.7 trillion cubic feet of gas and 85 million barrels of condensate. The natural gas reserve has been estimated to yield three trillion cubic feet of natural gas, capable of providing 3,000 megawatts of electricity. The Malampaya project started operations in mid-2001.
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