Government begins scrutiny of UC capacity to run Malampaya
BY LENIE LECTURA – JUNE 29, 2021
from Business Mirror
The Department of Energy (DOE) has started reviewing the sale of Shell Petroleum’s Malampaya stake to Davao businessman Dennis Uy’s Udenna Corp. (UC).
Energy Secretary Alfonso G. Cusi said during a television interview Tuesday that both parties have submitted the necessary documents related to the transaction. UC needs to secure the DOE’s green light to finalize the sale.
“Shell sold to Udenna’s group. That now is submitted to us. We are now evaluating the financial, technical capability of the transaction. It’s in process actually right now. We have no decision on that yet,” said Cusi.
The DOE will look into the capabilities of UC in taking over the Malampaya gas-to-power project in northwest Palawan. In particular, the agency will review the financial, technical and legal aspect of the transaction to make sure that gas supply and energy security will not be compromised.
Dennis Uy-led UC now controls 90 percent of the gas project after its unit, Malampaya Energy XP Pte. Ltd., signed a deal with Shell Petroleum N.V. to sell its 100-percent shareholding in Shell Philippines Exploration B.V. (SPEX).
Spex holds a 45-percent operating interest in Service Contract 38, which includes the Malampaya gas field.
Aside from SPEX, the other partners in Service Contract 38 are UC38 LLC, a subsidiary of Udenna (45 percent) and state-owned PNOC Exploration Corp. (10 percent).
The sale, which is still subject to regulatory approvals, is worth $380 million, with additional payments of up to $80 million between 2022 and 2024, depending on asset performance and commodity prices. The transaction is targeted to be completed by the end of 2021.
Cusi stressed that the deal between Malampaya Energy and Shell Petroleum N.V is purely a private business transaction and that the DOE has no part in this agreement or the selection process.
However, he said, the parties need to formally inform the DOE of the transaction and submit the necessary documents.
“As far as the government is concerned, it’s not yet final until they comply with the requirement of government,” said Cusi.
Malampaya delivers a fifth of the Philippines’s growing electricity requirements through the supply of natural gas to five power plants in Luzon. The asset has been operating safely and reliably since 2002 and has contributed over $10 billion in revenues to the Philippine government to date.
