Medco, Exspan complete due diligence on Philippine?s Malampaya gas field

Two Indonesian firms ? PT Medco Energi International Tbk and its subsidiary Exspan -- have completed their due diligence audit on the stake the Philippine government is selling in the Malampaya natural gas project, Business World and Business Indonesia reported on Wednesday.

In a disclosure to the Philippine Stock Exchange, the exploration arm of the Philippine National Oil Corporation (PNOC) said Medco and Exspan completed their due diligence on Nov. 7.

"Medco and Exspan, both Indonesian companies, have concluded their joint due diligence in connection with their joint interest to acquire a stake in the privatization of PNOC-EC's (PNOC Exploration Corporation?s) 10 percent participating interest" in Malampaya, PNOC said in the disclosure.

But when Bisnis asked for confirmation from the Medco?s finance director Sugiharto in Jakarta, he refused to confirm the news.

Medco is a consortium of several companies involved in oil- and gas-related activities, including exploration, production and support services for oil and natural gas. It also has energy companies involved in onshore and offshore drilling and is listed at the Jakarta Stock Exchange. Exspan is a subsidiary of Medco.

The government, through PNOC-EC, holds a 10% interest stake in the US$4.5-billion Malampaya deep water gas-to-power project, and is looking at selling 49% of the stake to private investors through bidding.

The proceeds of the sale will be used to help fund the budget deficit this year, which is expected to hit 202 billion Philippine pesos or 4.7 percent of the gross domestic product.

The government is in the process of forming a subsidiary that will handle the 10 percent stake in Malampaya. The unit will be 51 percent owned by PNOC-EC and 49 percent owned by the private sector.

PNOC officials earlier said six firms signed a confidentiality agreement with PNOC for the release of data that the firms will review for their due diligence on the Malampaya stake.

Malampaya is the Philippines' largest gas field and has 2.2 trillion cubic feet gas reserves.

During the due diligence, the interested parties will review government documents pertaining to its contracts in Malampaya, including its agreement with Shell Philippines Exploration B.V. and Texaco Philippines Inc., which own a 45 percent stake each in the project.

Firms conducting the audit are also going to review Malampaya's power purchase agreement with First Gas Power Corp. (*)