CAPITAL: Manila

MONETARY UNIT: Peso

REFINING CAPACITY: 323,050 b/cd

OIL PRODUCTION: 700 b/d

OIL RESERVES: 213 million bbl

GAS RESERVES: 2.7 tcf

OIL industry deregulation became a quagmire in the Philippines in 1997.

In February, the government of President Fidel Ramos deregulated the industry. As the peso lost value in the second half and product prices began to rise, refiners fell subject to charges of collusion. Deregulation thus became a legislative and judicial issue.

In October, the Supreme Court issued an injunction repealing the most recent price increases. In November it struck down the deregulation law, saying provisions on tariff differentials, inventories, and predatory pricing hurt competition.

At yearend there was a strong chance that the old laws would be reinstated. The court ruling revived the Oil Price Stabilization Fund, under which the government had accumulated large debts to oil companies.

In the Philippines` only large upstream development, units of Royal Dutch/Shell and Occidental Petroleum secured a gas supply deal essential to their $2 billion development of Malampaya and Camago natural gas fields off Palawan Island.

They were to supply First Gas Holdings, a Manila joint venture. BG plc, a 40% stakeholder, said the joint venture planned to build a 1,000 MW power plant at Santa Rita and a 500 MW plant near Batangas.

Separately, Shell and Oxy agreed to supply gas from the fields to National Power Corp. for a 1,200 MW combined-cycle power plant at Ilijan.

The companies planned to develop Malampaya and Camago jointly with subsea wells in deep water tied back to a gas processing platform in shallower water. A 450 km pipeline would take gas to Tabangao on Luzon Island.

Among processing developments, Mitsubishi Corp. and Sumitomo Corp. announced plans to build a $50 billion, 500,000 metric ton/year ethylene plant at Bataan, where both companies operate or participate in existing chemical plants.

In another project at Bataan, Bataan Polyethylene Corp. let contract to JGC Corp. of Tokyo for engineering and procurement for a project to build a 250,000 ton/year polyethylene plant.