Ex-DOE official confirms backing bid to sell gov’t stake in PNOC-EC

By Alena Mae S. Flores – May 23, 2023, 7:00 pm
from manilastandard.net

A former Energy undersecretary said Monday he implemented a directive from the Executive Department and the Department of Energy to sell 5 percent of the government’s stake in Philippine National Oil Co.-Exploration Corp. in 2005.

Eduardo Mañalac, also former president of PNOC, said he was compelled to go along with the directive.

Mañalac made the statement at an online forum organized by the National Youth Movement for the West Philippine Sea in response to a question on whether he had a hand in the sale of the government’s 5-percent stake in PNOC-EC to a South Korean firm.

“The instruction to sell the 50 percent, meaning the five percent, of the 10 percent government stake in PNOC-EC came from the government, came from the DOF, supported by the Executive, by the President,” he said.

“And the reason given to sell the PNOC-EC’s share at that time was that, if you remember, PNOC paid a hundred plus million for the 10-percent stake. It was loaned. So, what the government was saying was we have to pay that. We have to raise the money,” Mañalac said.

“So, they gave me instructions to sell half of it. Of course, I was against it, but you have to follow, you argue against it, but at the end of the day, you tried to obey the instructions as best as you can,” he said.

He said the sale did not push through when the National Economic Development Authority opposed it.

Mañalac also responded to businessman Enrique Razon Jr.’s statement he brokered the Joint Marine Seismic Undertaking agreement with Vietnam and China, which was declared unconstitutional by the Supreme Court.

“The tripartite agreement for the Joint Marine Seismic Undertaking is a three-year cooperative agreement between CNOOC (China National Offshore Oil Corp.), Vietnam and PNOC to jointly gather seismic data in certain areas of the South China Sea,” said Mañalac.

“It is connected with the government’s effort to acquire or reach energy independence for the people. So see, with our high dependence on imported petroleum and rising oil prices in 2004. The government then … launched an ambitious five-point energy independence program,” he said.

“The JMSU was part of our five-point energy independence agenda to find new and indigenous petroleum reserves,” Mañalac said.

“It is not my idea. It is the idea of the government as part of its energy independence strategy,” he said.

Mañalac signed the JMSU with China National Offshore Oil Corp. and Vietnam Oil and Gas Corp. (PetroVietnam), allowing seismic work on a 142,886-square-kilometer area in the West Philippine Sea.

Mañalac signed the agreements in his capacity as PNOC president and chief executive.

Mañalac said the PNOC under his leadership had been “extremely careful and consistent in ensuring the constitutionality of the JSMU” and closely coordinated with concerned agencies.

“The JMSU is a commercial and operative agreement between three national oil companies to jointly acquire seismic data. No oil exploration drilling, no production activities were covered by the agreement,” Mañalac said.

He said the JSMU was simply a data-gathering effort.

“As I said, the JMSU is not a treaty and if in three years of the JMSU, no new definitive agreements are agreed on, the JSMU expires. And it expired on June 8, 2008,” Mañalac said.

“It must be clear that the President did not sign the JMSU nor the DOE,” Mañalac said. “It was the PNOC headed by myself at the time,” he said.

He said the agreement did not undermine the Philippines’ rights in its exclusive economic zone in the West Philippine Sea.

“It is very clear that the agreement is designed to be scientific in nature and does not affect any territorial claims of any country either by the Philippines, China and Vietnam,” Mañalac said.

The Supreme Court invalidated the agreement in January, saying that it violated Section 2, Article 12 of the 1987 Constitution for “allowing wholly-owned foreign corporations to participate in the exploration of the country’s natural resources without observing the safeguards” provided by the law.

Razon’s Prime Infra said in a statement the SC decision led to accusations of Mañalac “committing treason.”

The Malampaya gas field in northwest Palawan is one of the country’s biggest energy assets. It supplies natural gas to Santa Rita, San Lorenzo and Ilijan—which have a combined capacity of 3,200 megawatts.

The Malampaya powers around 20 percent of Luzon’s electricity requirements. The project has generated over $10 billion in revenues for the Philippine government and saves the country an estimated $2.5 billion in annual import costs.