PNOC-EC to convert dollar loans to pesos as hedge vs forex losses

MANILA, Philippines –  PNOC-Exploration Corp., the upstream oil, gas and coal subsidiary of state-owned Philippine National Oil Co. (PNOC), plans to convert its dollar-denominated loans to local currency loans to hedge against foreign exchange losses.

PNOC-EC chairman and CEO Gemiliano Lopez Jr. said the company currently has about $22 million remaining borrowings that would be subjected to the loan hedging scheme.

“We want to convert our dollar loans to pesos to save on interest,” he said.

Lopez said PNOC-EC had incurred foreign exchange losses of about P200 million in January this year. Despite these losses, the company was able to slowly trim down its losses from $93 million to $37 million, and eventually to $22 million.

The dollar debts of PNOC-EC was incurred when it acquired a 10-percent stake in the Malampaya deep water gas-to-power project at a cost of over $100 million.

PNOC-EC’s shares of stock are 99.79 percent owned by the Philippine government through PNOC, with the remaining 0.21 percent held by public shareholders.

PNOC-EC currently holds interests in eight petroleum service contract (SC) areas, namely SC 37 (Cagayan), SC 38 (Malampaya), SC 43 (Ragay Gulf), SC 47 (offshore Mindoro), SC 57 (Calamian), SC 58 (West Calamian), SC 59 (West Balabac) and SC 63 (East Sabina).

The SC 38 acreage is in the production phase, while the rest are exploration blocks. PNOC-EC also holds the rights for the development of the Camago Malampaya Oil Leg (CMOL) project in Northwest Palawan.

The company is also taking the lead in the implementation of downstream natural gas infrastructure projects such as the Batangas-to-Manila natural gas pipeline and the integrated Bataan liquefied natural gas (LNG) terminal, power plant and natural gas and pipeline projects.

Aside from petroleum, PNOC-EC is also engaged in the coal business. The company holds coal operating contracts in various parts of the country, namely COC 41 and COC 152 (Siay) in Zamboanga Sibugay, COC 122 and 141 in Isabela and COC 140 in Surigao del Sur.

PNOC-EC also operates coal terminals in Zamboanga Sibugay, Cebu, Batangas, and North Harbor, which serve as its handling facility for local as well as imported coal that the company supplies to power plants and cement factories in the Philippines.

PNOC-EC also owns a private commercial port – the Energy Supply Base (ESB) located in Mabini, Batangas which offers berthing, cargo handling, storage and warehousing facilities to energy companies and other commercial clients.