PNOC wants ‘voice’ in Malampaya project

Published September 16, 2018, 10:00 PM By Myrna M. Velasco

https://business.mb.com.ph/2018/09/16/pnoc-wants-voice-in-malampaya-project/

State-run Philippine National Oil Company (PNOC) has formally asked the Department of Energy (DOE) for its inclusion in the negotiating panel that will flesh out the terms of any portended license extension for the multi-billion Malampaya gas field project.

“That will be next year, we will have to sit in the negotiating table… and I requested the Secretary that PNOC should be included,” PNOC president and chief executive officer Reuben S. Lista said.

He explained that the state-run firm must lend its voice to the targeted discussions, not just because of its banked gas, but primarily on prospects that it might eventually administer the Operation and Maintenance (O&M) deal – in case the decision is to place the gas field under the State’s charge.

“There’s a possibility that PNOC-EC or PNOC mother might be asked to look for a sub-contractor O&M (for the gas field),” he said.

PNOC-Exploration Corporation is a subsidiary of PNOC, which is a minority stakeholder in the Service Contract 38 of Shell Philippines Exploration B.V., or the corporate vehicle of the Malampaya consortium in the commercial development and operation of the gas field.

Given its stake in SC 38, PNOC-EC may not likely be the perfect government entity that will sit in the negotiating table when Malampaya’s license extension parameters will be discussed, according to Lista.

“I asked the Secretary that the president of PNOC mother be a part of the negotiating team…it should be us because PNOC-EC can’t represent PNOC in the negotiations because it is a partner of SC 38,” the PNOC chief executive reiterated.

The Malampaya service contract will lapse in 2024 and there had been previous application of the operating consortium to have its license extended for 15 years – or until 2039.

Lista nevertheless qualified that the outcome of the negotiations could either be: the government warrants an extension or the State will take over the facility. The second one propels the need to engage technically and financially qualified O&M contractors.

He opined that even if the decision will be for government to eventually operate the field, first priority may still be given to Shell and Chevron when it comes to the O&M deal.

At this stage though, the Malampaya consortium’s focus is not exactly on its earlier bid for license extension, but in scoring legal victory over a tax case slapped against it by the Commission on Audit.