DOE may face legal raps on Malampaya license extension

By Myrna M. Velasco – September 30, 2021, 3:52 PM
from Manila Bulletin

The Department of Energy (DoE) will be legally accountable if it will push through with the targeted ‘midnight deal’ for the license extension of the Malampaya gas field project, that in the process will primarily benefit Malampaya Energy XP Pte Ltd, a company of Davao businessman Dennis Uy.

In a statement to the media on Thursday, Senate Committee on Energy Chairman Sherwin T. Gatchalian raised alarm “over the possibility of the government entering into a ‘midnight deal’ to extend the service contract of the Malampaya project.”

Senator Sherwin Gatchalian

The lawmaker chiefly cited “the speed in the current negotiations when Malampaya Energy entered the picture; while Shell was never given assurance by the DOE since 2016 if they would be extended or not.”

Gatchalian sounded off that the DOE’s inaction on the license extension plea of Shell Philippines Exploration B. V. (SPEX) had been the last nail in the coffin that triggered the exodus of the major shareholders in the Malampaya consortium – first to exit was American firm Chevron in March 2020; while Shell is due to conclude its shares divestment by December this year.

“I can’t shake it off in my mind that there would be midnight deal, because as early as 2016, Shell already wanted to renew the service contract – I know that for a fact. I can attest (to that). When Udenna entered the picture, the negotiations (for license renewal) suddenly turned very fast,” the senator lamented.

Udenna Corporation is the parent firm of Malampaya Energy, which is the corporate vehicle used by Uy in acquiring the 45-percent stake of Shell in the commercially producing gas field.

“I think it’s really quite premature and unethical for Malampaya Energy to negotiate with the government. It’s too presumptuous in fact,” Gatchalian stressed.

He qualified that his concern on highly probable ‘midnight deal’ for Malampaya’s service contract (SC) 38 extension has been the same sentiment already

sounded by his lawmaker-colleagues in the upper chamber.

In line with the targeted license extension, Gatchalian called the attention of the DOE again on the “insufficient foundation for legal basis” when the agency first approved the sale of the 45-percent stake of Chevron to Udenna subsidiary UC Malampaya Philippines Pte Ltd. (UC MPPL).

While lambasting DOE officials, he stressed that “what you need to address first is your insufficient foundation for legal basis and I will not tolerate that in the evaluation of Shell.”

Gatchalian added “I will take every recourse possible to hold you to account because it’s already the operations part (of the Malampaya field) that’s being talked about here. Then we look at Chevron deal, I will likewise hold you to account in this Chevron-Udenna deal.”

The senator stipulated that “as Filipinos, we want an operator who is qualified, experienced and who can assure us of continuous flow of gas to our power plants. As a consumer, I want my public servants in the DoE to exercise prudence, diligence and integrity.”