Overhaul in PNOC’s business mandate pushed
By Myrna M. Velasco – October 28, 2022, 1:19 PM
from Manila Bulletin
A legislative proposal has been lodged in the Senate for the overhaul of the investment mandate of state-run Philippine National Oil Company (PNOC) to focus more on oil and gas exploration, and production (E&P) ventures.
According to Senate Committee on Energy Vice Chairman Sherwin T. Gatchalian, the PNOC shall take the lead in the government’s bid of establishing “a national policy and framework for petroleum exploration and development in the country” and that could be firmed up via the amendment of its Charter; Presidential Decree (PD) 334 or the law that paved the way for the state-run firm’s creation.
Through Senate Bill No. 380, which he principally authored, the lawmaker indicated that PNOC “should refocus its mandate exclusively on oil and gas exploration and development.”
He articulated that the role of the government is critical in the exploration and development of the indigenous resources of the Philippines; and it is PNOC that is best-fitted to take on that function.
It is within that precept then that he wants PNOC’s business acumen to be reinforced, so it can re-position itself as a sensible player in cornering much-needed capital in the country’s E&P sector – one that could equal the stronghold of neighboring energy-markets in the Southeast Asian region.
Gatchalian stipulated “PNOC must be empowered to invest in petroleum operation projects, both here and abroad, and should be allowed to retain 50-percent of its net earnings for local petroleum exploration and development.”
The Philippines is considerably a laggard on the sphere of E&P investments, hence, this is also the pivot of policy fixes being pursued now by the Marcos administration.
The lawmaker opined that with the capital-intensive nature of the upstream petroleum sector as well as its importance in achieving energy security and self-sufficiency, “the government should jumpstart the development of the sector similar to what other countries have done.”
At this stage, PNOC opted to embrace diversified core of investments – some of which did not end up viable in promoting the energy security agenda of the country.
Taking cue from such experiences, Gatchalian emphasized” there is a need to merge all subsidiaries and PNOC companies into just one PNOC for a more coherent and targeted direction and improved operational efficiency.”
Currently, the PNOC mother unit is targeting to be on the downstream segment of the oil industry; while its subsidiary PNOC-Exploration Corporation is in upstream ventures including its strategic minority stake in the depleting Malamgas gas field project.
The other subsidiary, PNOC-Renewables Corporation, has also been trying to compete with the private sector on the rollout of renewable energy investments, although it has not been gaining that much traction and it has instead been posting financial losses for the past 10 years already.
