Congress seeks proof of SPEX-Udenna Malampaya sale deal
By Myrna M. Velasco – September 11, 2022, 8:30 PM
from Manila Bulletin
The House Committee on Appropriations has directed the Department of Energy (DOE) to submit this month the copy of the share purchase agreement (SPA) that was signed between Shell Petroleum N.V. and Malampaya Energy XP Pte. Ltd. (MEXP) for the government to evaluate what are the rights and obligations assigned to the buyer and if there are government approvals being bypassed on shares’ divestment in the Malampaya gas field project.
The request on document-submission was formally manifested by Party List Representative Arlene Brosas during a recent budget briefing for the different agencies of the energy sector.
Subsequently, House Committee on Appropriations Vice Chairperson Stella Quimbo instructed the DOE to submit the requested document by September 19 this year for scrutiny by the legislative body at the continuation of the budget deliberations of the energy agencies.
Energy Undersecretary Donato Marcos has committed to Congress that the SPA on the divestment of the operating stake of the Malampaya gas field asset will be submitted to Congress as required by the lawmakers.
The SPA was firmed up in May last year between Shell Petroleum N.V. for the shares held by Shell Philippines Exploration B.V. (SPEX) in Service Contract 38 of the Malampaya consortium as the seller, and MEXP, a subsidiary-company of Udenna Corporation of businessman Dennis Uy, being the buyer.
Brosas, in particular, has been zeroing in on concerns why private companies like SPEX and MEXP have been loosely trading the operating stake of the country’s very vital energy asset without first securing warranted government approval.
Marcos has indicated in a Congressional hearing that the deal between Shell and MEXP had already been ‘consummated’, but his statement raised more questions than answers because state-run Philippine National Oil Company-Exploration Corporation (PNOC-EC), a minority shareholder in the Malampaya project, withheld its consent on the sale process around December last year.
The energy official similarly noted that there was no approval granted by the DOE to the SPEX-MEXP transaction, because the buyer-firm has not addressed yet the ‘red flags’ raised by the government.
Brosas questioned then ‘the assignment of rights’ being claimed by MEXP as supposedly accorded by Shell under the SPA, given the lack of government approval as well as the withholding of a consent by one of the partners in SC 38.
The purported ‘assignment of rights’ in the SPA warranted MEXP’s divestment of the Malampaya operating stake in Malampaya to new buyer Prime Exploration Pte. Ltd.
At the upper chamber, Senate Committee on Energy Vice Chairman Sherwin T. Gatchalian stipulated that in the unloading of Shell’s Malampaya shares, this “should be in compliance with the law to ensure the protection of consumers, the government, and the country’s energy security.”
He emphasized that since PNOC-EC did not give its approval to the sale, “Malampaya Energy does not hold the controlling interest of SPEX, so Prime Infra cannot say that it acquired a major stake in Malampaya until Malampaya Energy gets government approval.”
Gatchalian, nevertheless, acknowledged that “We don’t know the terms of the deal. So, we have to make sure that the transaction is compliant with law and regulation as Malampaya is the country’s single most important energy resource.”
The solon similarly reminded all relevant parties that “the agreement requires prior approval from the DOE under Presidential Decree (PD) No. 87 and Department Circular (DC) 2007-04-0003.”
PD 87 is the country’s Oil and Gas Law that governs the exploration and development of indigenous petroleum resources; while the specified DOE Circular delineates the processes of warranted regulatory approval when interest-holders will divest shareholders in service contracts.
