Philex May Spin Off Gas Field Comparable to Philippine's Malampaya Size

Philex Mining Corp., the Philippines’ biggest miner, said it may spin off its hydrocarbon assets, including 70 percent of a gas field that may be as large as the Malampaya gas project, the nation’s biggest.

“The plan is really to spin off the hydrocarbon assets into a Philex energy company away from the mining business,” Philex Chairman Manuel Pangilinan said in an interview in Hong Kong yesterday. “The initial indications are similar in size to Malampaya.”

Malampaya, off the western island of Palawan, is controlled by Royal Dutch Shell Plc and supplies power plants that comprise 18 percent of generating capacity in the Southeast Asian nation, according to the energy department. Philex’s Forum Energy Plc unit owns 70 percent of Service Contract 72, which covers the Sampaguita gas field also off Palawan.

The Philippines needs new power sources to avert outages resulting from under-investment. Some parts of the country experienced hours of outages this summer as an El Nino-induced dry spell idled hydro power plants. Aboitiz Power Corp. shares more than doubled this year as higher electricity prices boosted its profit 19-fold.

Separately, Philex plans to start developing its Silangan mine in Surigao del Sur province as early as next year, Pangilinan said. Silangan may enable Philex to match the resources it had when it started with its Padcal site in Benguet province, 50 years ago, he said. The company is exploring whether Padcal operations can extend past 2017, when it is projected to expire.

The company will spend $600 million to develop Silangan and plans to close Padcal in 2014, President Ernesto Villaluna said in April last year.

Meanwhile, Pangilinan said Metro Pacific Investments Corp., where he is also chairman, may be able to work together with San Miguel Corp. to develop the airport in the former Clark Air Base north of Manila.

“We might announce something soon,” he said, declining to elaborate.

Philex rose 6.1 percent to 13 pesos at the close of trading at noon in Manila, its highest close since April 21.

To contact the reporters on this story: Frank Longid in Hong Kong at flongid@bloomberg.net; Cecilia Yap in Manila at cyap19@bloomberg.net

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