A FORMER top energy official implemented a directive in 2005 to sell half of the government’s stake in the Malampaya project to a Korean consortium in 2005, but the deal subsequently fell through.
“The instruction to sell the 50 percent, meaning the 5 percent of the 10 percent of PNOC-EC [Philippine National Oil Company-Exploration Corp.], came from government, came from DOF [Department of Finance] and supported by the Executive, by the President,” said Eduardo Mañalac, former Department of Energy (DOE) Undersecretary and PNOC President, during an online forum organized by the National Youth Movement for the West Philippine Sea.
Mañalac, who now wants the government to operate the Malampaya deepwater gas-to-power project, said there was a directive to sell 5 percent of the 10-percent shares of PNOC-EC to the consortium led by Korean Gas Corp. (Kogas).
The sale was meant to pay for the loans used to acquire the said stake in the Malampaya project. It may be recalled that PNOC-EC borrowed $175 million to buy the 10-percent stake in the gas project.
“The reason given to sell at least half of that PNOC-EC share at that time, if you remember, PNOC paid $100 million plus for the 10-percent [stake]. Inutang daw ‘yun. So, what government was saying was we have to pay that. We have to raise the money,” Mañalac said.
Mañalac served as DOE undersecretary from 2003 to 2004 and PNOC President from 2004 to 2006.
“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 at the forum.
However, the government later on terminated the sale. “But in the end it was not completed. I guess the Neda [National Economic and Development Authority] that time was able to convince the administration to keep the whole of 10 percent,” added Mañalac. “That’s my recollection,” he added.
Support for JMSU
In the same forum, the veteran geologist explained why he supported the tripartite agreement for Joint Marine Seismic Undertaking (JMSU) among companies from China, Vietnam and Philippines.
The JMSU, he said, was part of then Arroyo administration’s five-point energy independence agenda to find and develop new indigenous petroleum reserves.
Mañalac, responding to tycoon Enrique Razon Jr’s statement, also admitted that he supported the JMSU agreement, which would have allowed these countries to explore Philippine natural resources without government supervision. But he pointed out that his actions were in accordance with government orders and directives in relation to a policy of energy independence.
“It is connected with the government’s effort to acquire or reach energy independence for the people,” he said. “It is not my idea. It is the idea of the government as part of its energy independence strategy,” he stressed.
The Supreme Court dismissed the JMSU deal in January 2023, citing a breach of Section 2, Article 12 of the 1987 Constitution.
Mañalac said the PNOC under his leadership had been “extremely careful and consistent in ensuring the constitutionality of the JSMU.”
“PNOC closely coordinated with concerned agencies to ensure completed staff work.
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.
JMSU is simply a data-gathering effort among three oil companies, he added.
“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 JMSU expires. And it expired on June 8, 2008. It must be clear that the President did not sign the JMSU nor the DOE. It was the PNOC headed by myself at the time,” he said.
However, he said, the governments of the three countries needed to first approve the agreement to make it binding. He also defended the agreement, saying it 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.