By Victor V. Saulon, Sub-editor

THE exploration unit of state-led Philippine National Oil Co. (PNOC) is exercising its right to acquire 10% of the shares being sold by one of its partners in the offshore Malampaya gas-to-power project, the Energy department’s top official said.

“We exercised the right because we feel that the acquisition price is very advantageous for EC (PNOC Exploration Corp.) to invest,” Department of Energy (DoE) Alfonso G. Cusi told reporters during an informal gathering at the PNOC head office on Wednesday night.

“It’s an opportunity for EC to invest. Maganda ‘yung return na nakikita (The expected return is good),” he added.

Mr. Cusi said he was not sure about the acquisition price, but the board of directors of PNOC-EC had approved of the move. The DoE secretary chairs the PNOC board by virtue of his office.

PNOC’s upstream oil, gas and coal subsidiary holds a 10% stake in the Malampaya deepwater project, with Chevron Malampaya LLC holding 45% and Shell Philippines Exploration B.V. (SPEx) holding the other 45%.

SPEx is the operator of the Service Contract (SC) 38 for Malampaya, the country’s large scale gas discovery. The project is said to supply about a third of the country’s power needs and has contributed over $10 billion in government revenues.

On Nov. 13, Udenna Corp. announced that its subsidiary UC Malampaya Philippines Pte. Ltd. had signed a sale and purchase agreement to acquire the stake of Chevron Corp.’s Philippine unit in the project.

Udenna is the holding firm of Davao City businessman Dennis A. Uy, who also leads Phoenix Petroleum Philippines, Inc., the country’s fastest-growing independent oil firm with a plan to build a liquefied natural gas (LNG) import terminal with Chinese state firm CNOOC Gas and Power Group Co., Ltd. The parties have since sought a suspension of the LNG project.

Separately, DoE Undersecretary Donato D. Marcos said that under the joint operating agreement of SC 38, the partners have a right to match an offer to acquire the stake of any of them.

He said SPEx is “contented” with its 45% share “and they don’t intend to make it bigger.” He said the right to match of PNOC-EC is its proportional participating interest in the project, or 10%. He added that the state firm could buy the entire stake being sold if SPEx declines to exercise its right.

Ngayon si PNOC-EC pinag-aralan nila ang kanilang financial capabilities. Hindi nila kaya (PNOC-EC evaluated its financial capabilities. They cannot afford it). They are inclined to get only their apportionment,” he said, referring to the 10% of the shares being sold by Chevron Malampaya.

Mr. Marcos said the cost of the 10% shares is about $100 million, although he qualified that the amount was still “under review.” The figure he cited translates the price of the 45% stake being sold at $1 billion. He declined to confirm the price.