Abolition of PNOC subsidiaries pushed

The subsidiaries of state firm Philippine National Oil Company (PNOC) should be abolished to provide the mother company a clear direction, particularly to focus on petroleum exploration and production, according to Sen. Sherwin Gatchalian.

Gatchalian, who chaired the Senate committee on energy, said in a statement on Tuesday the suspension from office of Pedro Aquino—president and chief executive of PNOC Exploration Corp.—“highlights the need for a clear policy direction for the entire PNOC family.”

The lawmaker said Aquino was suspended for approving a memorandum of agreement with a Russian firm for the development of a multilateral cooperation in oil products and trading, and joint participation in oil refining.

Gatchalian said Aquino did this without the permission from the board or from Energy Secretary Alfonso Cusi, who was also the company’s chair.

“We could have prevented this situation if we had a more focused PNOC,” Gatchalian said. “Unfortunately, the PNOC is spreading itself too thin by doing different things when its focus should be on oil and gas exploration.”

This function is currently assigned to PNOC EC, but Gatchalian said the deal with the Russians showed the subsidiary’s intent to go into petroleum trading.

He added that, meanwhile, the PNOC mother company wanted to go into liquefied natural gas projects while the PNOC Renewables Corp. was building rooftop solar power systems.

“We plan to remedy this situation by championing in this Congress a measure that will restructure PNOC by abolishing its existing subsidiaries and directing its focus away from non-exploration activities,” Gatchalian said.

“The bottom line here is that we will refocus the PNOC to purely upstream oil and gas so that it will contribute in securing the country’s energy needs,” he said.

In a statement dated June 2, 2017, Moscow-based PJSC Rosneft Oil Co. said it signed with PNOC EC and Hong Kong-based Pionaire Finance Ltd. “a trilateral agreement on development of cooperation.”

Rosneft said the agreement “lays the basis for the development of multilateral cooperation in oil and products trading as well as for joint participation in oil refining projects.”

Rosneft said that, in particular, both the Russian firm and PNOC EC intended to sign a strategic long-term contract for delivery of crude oil to the latter.

Since then, nothing further has been announced regarding the agreement. However, Cusi himself said during a spike in oil prices in 2018 that PNOC EC was making arrangements to import “cheaper” diesel from Russian sources—a move that also did not prosper.