PNOC eyes increasing stake in Malampaya

Davinci Maru, ABS-CBN News

Posted at Nov 10 2020 04:48 PM

PNOC eyes increasing stake in Malampaya 1
Malampaya gas-to-power project. Handout

MANILA – The Philippine National Oil Company (PNOC) said Tuesday it was studying the possibility of increasing its stake in the Malampaya gas field following Chevron’s divestment of the project.

“We are studying the possibility of actually getting more because of the possible sell of Chevron,” PNOC Reuben Lista said during a Senate hearing on issues surrounding Service Contract 38 or the license for the Malampaya project.

Its upstream oil, gas and coal subsidiary PNOC-Exploration Corporation holds a 10-percent interest in the water gas-to-power project, which provides about a fifth of the country’s electricity needs.

Chevron sold its 45-percent share of the project to Dennis Uy’s Udenna Corp. for $565 million in March 2020. However, the transfer of participating interest in the contract will need regulatory approval for the sale to be completed, the Department of Energy (DOE) said.

Shell Philippines Exploration B.V. (SPEX), which operates the gas field and holds a 45-percent stake, is also exploring options to divest its shares as part of an "ongoing portfolio rationalization."

PNOC-EC president Lt. Gen. Rozzano Briguez said part of their long-term plan was the possible takeover of the Malampaya field operation.

“That's part of the long-term plan we have because since we join the Malampaya, we already train our own people in order that we have the technical capability,” he said.

But the government-owned and controlled operation (GOCC), which is mandated to take the lead in exploration, development and production of the country’s oil, gas and coal resources, is not yet capable of handling Malampaya.

“However, currently, technically and financially, we are not yet capable of taking over such big operations because in our own estimates it would take about 2 more contracts or operations this magnitude before we can really operate deep see water explorations projects,” Briguez said.

For PNOC-EC to become an operator, the company will need 10 more years and must participate in 2 large-scale projects, he added.

During the hearing, former PNOC president Eduardo Mañalac said the company must take hold of Chevron’s interest instead of Udenna, saying it would maximize the benefits of the government.

He said the PNOC could earn P17 to P22 billion more per year, which are the revenues lost by the government by allowing private parties to take over.

According to his presentation, Chevron and Shell, with much higher interest, both earned P22.5 billion in 2019 compared to PNOC’s P4.9 billion.