MANILA, Philippines — State-run PNOC Exploration Corp. (PNOC-EC) aims to come out with a decision in October on the sale by Shell Philippines Exploration B.V. (SPEX) of its 45 percent operating interest in Service Contract (SC) 38 to Malampaya Energy XP Pte Ltd.
PNOC-EC president and CEO Rozzano Briguez said the state-run firm is still conducting its assessment on the financial statements of Malampaya Energy and its guarantor Udenna Corp.
“I opine we are halfway through the evaluation process. We might be ready by mid-October or thereabout,” he said in a text message.
PNOC-EC has waived its right to match option for the 45-percent stake of Royal Dutch Shell in SC 38, which covers the Malampaya deep water gas-to-power project. It, however, has yet to give its consent to the transaction.
The Department of Energy, which has the final approval on the transaction, has yet to start its evaluation pending PNOC-EC’s consent.
“We are waiting for that. If they don’t match it and endorse the purchase, only then will DOE start the evaluation [for the financial and technical capability for MEXP,” he said.
Last May, Shell Petroleum N.V. signed a sale and purchase agreement with MEXP for the sale of its 100 percent shareholding in SPEX for a total amount of $460 million, of which $380 million was paid upfront and additional payments of up to $80 million between 2022 to 2024 contingent on asset performance and commodity prices.
In a Senate inquiry last month, Senate Committee on Energy chairman Sherwin Gatchalian questioned the takeover of the gas field by the Malampaya Energy, which only had a capitalization of $100 and was found to be severely deficient.
However, Malampaya Energy expressed confidence it would pass PNOC-EC’s and DOE’s evaluation amid doubts on its financial records.
If the transaction is approved, Malampaya Energy is looking to drill a new well, put up production facility projects, and evaluate well and production enhancement technologies in hopes to immediately boost supply from and extend the life of the Malampaya gas field.
SC 38 is the country’s most successful Petroleum Service Contracts of 23 active projects. As the largest natural gas industrial project in the Philippines, it recovered all costs in four years.
Operating since 2001, the Malampaya project is the only local producer of indigenous natural gas. It supplies fuel to around 40 percent of gas-fired plants in Luzon, powering around 3,457 megawatts of power plants that provide power supply to the Luzon grid.
While the contract will end in 2024, supply from the Malampaya gas field is projected to be depleted by early 2022 or latest by 2027.