Exec: Udenna did not violate the law

BY LENIE LECTURA – NOVEMBER 18, 2021
from Business Mirror

UDENNA Corp. (UC) President Raymundo Martin Escalona cried foul Thursday after the company was criticized for its alleged midnight deals involving the acquisition of a controlling stake in the consortium that operates the Malampaya gas field project.

UC is controlled by Davao-based businessman Dennis Uy, who is a close associate of President Duterte. Escalona said all the accusations against Uy and his companies are “politically motivated.”

“I think personally that it’s really political and some people are trying to attack this administration. They may have their own reasons and maybe there’s not enough for them to attack this administration that they try to attack anyone who are perceived to be close to this administration. I think it’s really unfair because we’re collateral [damage] and they don’t realize that there are livelihoods at stake.”

Escalona said these attacks have affected “my and the group’s ability to be able to financially close pending transactions.”

He went on to say that the deals entered into with Shell and Chevron are legally binding. “We have not violated any law. We strongly believe that there is a need to regard the rule of law and put importance on contract sanctity.”

Escalona said the “flippant attitude” by some parties towards contract supply will further hurt any investment and exploration by international upstream companies in country.

Shell Philippines Exploration B.V. (SPEX), operator of the Malampaya consortium under Service Contract (SC) 38, and Chevron Philippines sold each of their entire 45-percent interest to UC.

The UC Malampaya Philippines-Chevron Malampaya deal was already approved by the Department of Energy (DOE).

Lawmakers have called the attention of the DOE, saying there was insufficient foundation for legal basis in approving the deal.

The Shell Philippines Exploration B.V. (Spex)-Malampaya Energy XP Pte. Ltd. deal is still awaiting the green light of the DOE.

The sale of the Chevron and Shell stakes will not have an impact on the government’s share from SC 38, said Escalona, adding that government will continue to receive 60 percent of the net proceeds without contributing to the costs of operating the facilities. The joint venture partners, he said, get 40 percent of the net proceeds while shouldering 100 percent of the costs which is about $150 to 160 million annually.

Escalona shared UC’s plans once it takes over the Malampaya gas project. “We will focus on urgently needed rejuvenation program to stem the decline of Malampaya after a seven-year hiatus in exploration activities.”

These do not only include increasing recovery from the Malampaya production area but also prove economic volumes in other prospects within the SC 38 area. At the core of the program is a planned drilling campaign within the SC 38 license area to add energy reserves and extend the life of the asset.”

When asked if UC’s investment in Malampaya is worth it, Escalona said, “Yes, it is very much worth it. For the first time in three decades, Malampaya will be managed by Filipinos, for Filipinos, fully focused on national priorities.”