Mañalac says it was “against his will” but he backed bid to sell 5% of gov’t stake in PNOC-EC
Philippine National Oil Co.-Exploration Corp.
MANILA, Philippines—A former energy undersecretary on Monday said he had implemented a directive from the Executive Department and Department of Energy (DOE) to sell 5 percent of the government’s stake in Philippine National Oil Co.-Exploration Corp. (PNOC-EC) way back in 2005 but “against his will.”
Eduardo Mañalac, also former president of PNOC, said he was compelled to go along with the directive.
Mañalac made the statements 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 bid to sell 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.
“The reason given to sell the PNOC-EC share at the time was that, if you remember, PNOC paid a hundred plus million for the 10 percent (stake). And so inutang yun daw. (It was loaned). So what the government was saying was we have to pay that. We have to raise the money,” Mañalac said.
The planned sale was hatched sometime in 2005 when Mañalac was still serving as DOE undersecretary and PNOC president.
“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.
But Mañalac said the sale was not consummated when the National Economic Development Authority (Neda) under then Socioeconomic Planning Secretary Romulo Neri opposed it.
“That’s my recollection,” Mañalac said at the forum.
Mañalac, responding to tycoon Enrique Razon Jr’s statement, also admitted that he supported the Joint Marine Seismic Undertaking (JSMU) agreement with Vietnam and China, which would have allowed these countries to eventually have a role in exploring Philippine natural resources without government supervision.
But he said his actions were in accordance with government orders and directives in relation to a policy of energy independence.
“The tripartite agreement for the Joint Marine Seismic Undertaking is a three-year cooperative agreement between CNOOC, 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,” he said.
“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 added.
Mañalac said the agenda was to develop the Philippines’ own indigenous petroleum resources, promote renewable power, increase the use of alternative fuels, form strategic regional alliances and strengthen energy conservation programs.
“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,” said.
Mañalac had brokered the JMSU with China National Offshore Oil Corp. (CNOOC) and Vietnam Oil and Gas Corp. (PetroVietnam) allowing seismic work on a 142,886-square-kilometer area in the West Philippine Sea.
Mañalac had signed the agreements in his capacity as PNOC president and chief executive officer.
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,” he said.
“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.
JSMU 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 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 at the forum.
“It was the PNOC headed by myself at the time,” he said.
But he said the governments of the three countries needed to first approve the agreement to make it binding.
He 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.
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.
In a statement about the high court decision, Razon-led Prime Infra, said it led to accusations of Mañalac “committing treason.”
The Malampaya Gas Field is an essential asset for the Philippines and has been the primary source of feedstock for three power plants—Santa Rita, San Lorenzo and Ilijan—which have a combined capacity of 3,200 megawatts. Malampaya powers around 20 percent of Luzon’s electricity requirements.
From its inception in 2001 through early 2020, the Malampaya gas project generated over $10 billion in revenues for the Philippine government.
It also reduces oil imports by more than 800,000 barrels per year, which saves the country an estimated $2.5 billion in annual import costs.
