Lawmaker wants transparency in Malampaya sale review

MANILA, Philippines — A lawmaker has demanded transparency from the Department of Energy which is reviewing the sale of Shell Philippines Exploration BV’s (SPEX) stake in the Malampaya gas field project to a unit of businessman Dennis Uy’s Udenna Corp.

“This is no ordinary asset. What are the sets of criteria that they will use in evaluating this transaction? It has to be very clear to the public,” said Sen. Sherwin Gatchalian.

Earlier this week, DOE Secretary Alfonso Cusi said the transaction between SPEX and Malampaya Energy XP Pte Ltd., a subsidiary of Udenna, was still under evaluation by the agency.

“As far as the government is concerned, it’s not yet final until they comply with the requirement of the government,” Cusi said in an interview in ANC’s Headstart.

The approval of the transaction is in accordance with Presidential Decree 87 otherwise known as the Oil Exploration and Development Act of 1972.

Last month, Shell Petroleum N.V. signed a sale and purchase agreement with Malampaya Energy XP Pte Ltd., a subsidiary of Udenna, for the sale of its 100 percent shareholdings in Shell Philippines Exploration B.V. (SPEX).

SPEX holds a 45 percent operating interest in Service Contract (SC) 38, which covers the producing Malampaya gas field.

The deal amounts to up to $460 million, with $380 million paid initially and up to $80 million to be paid between 2022 to 2024, contingent on asset performance and commodity prices.

The other partners in SC38 are UC38 LLC, a subsidiary of Udenna Corp. with 45 percent, and Philippine National Oil Co.-Exploration Corp. with 10 percent.

If approved, Udenna—through its subsidiaries—will end up owning 90 percent of the project.

Last April 15, Gatchalian also sought justification from the DOE on its decision to give the green light on the transfer of Chevron’s 45 percent interest in the Malampaya project to UC Malampaya Philippines, another subsidiary of Udenna.

Gatchalian noted the significance in acquiring Shell’s stake as the company not only holds a 45 percent share but also the operatorship of SC 38, a deepwater license that comprises the Malampaya gas field.

“Whoever steps in to take the place of Shell will supply gas to our homes. Malampaya gas project powers about one in every five homes in Luzon. It’s important that we keep our lights on, that we have a constant supply of gas and in order to do that, we need to have very competent and financially strong operators,” Gatchalian said.

“The government, through the DOE, needs to evaluate the transaction and ensure that it’s legal and that the new operator is financially and technically competent and has the capability of running Malampaya and supplying electricity to our homes,” he said.

In the joint operating agreement signed by the members of the consortium operating Malampaya (Shell, Chevron, and PNOC) there exists a provision that for the sale of shares to be finalized, the party or the transferer has to ensure that it gets all prior permits or approvals from the government.