Malampaya
EYES WIDE OPEN – Iris Gonzales – August 1, 2022 | 12:00am
from The Philippine Star
If all goes well, ports and casino tycoon Enrique Razon may finally complete his Malampaya deal this week or soon after.
The last remaining requirement is the consent of the PNOC Exploration Corp. (PNOC EC) and the Department of Energy (DOE), but I believe this is practically in the bag.
This was also the last hurdle that the camp of Davao-based businessman Dennis “DAU” Uy needed to complete to be able to operate the Malampaya deep water gas-to-power project in offshore Palawan, touted as the country’s energy crown jewel. DAU, however, faced roadblocks that in the end, he decided to just sell to Razon.
It doesn’t look like Razon is facing such problems in his bid to operate Malampaya, with no group or sector raising a howl over his entry—as some lawyers and former PNOC executives did during DAU’s time. They raised an issue over DAU’s track record in energy and his group’s high level of debt. They also did not agree with former energy secretary Alfonso Cusi who initially said the DOE’s consent was not needed because the transaction was private.
As for EKR, we’re not hearing such issues now. He may actually have it easy because of his group’s track record in running a business—from his sprawling mammoth global ports conglomerate International Container Terminal Services Inc. (ICTSI) to his growing casino business, his foray into infrastructure and water, and his power company in Iloilo.
But also because I really don’t think he would have a problem with Franz Josef Alvarez, the Palawan representative who has been recently appointed as PNOC EC’s acting president, CEO, and board member. Alvarez is familiar with EKR as a businessman. In fact, as a member of Congress, Alvarez belongs to the Razon-backed National Unity Party.
I also speculate that the DOE will give its consent because newly appointed Energy Secretary Raphael “Popo” Lotilla knows too well the urgency of really moving the Malampaya deal forward to enable its operator to be able to determine how to increase the output from the facility.
Sec. Popo knows the country’s energy situation is precarious and that the continuous operations of Malampaya will be crucial in ensuring the country’s energy security.
As for Shell Petroleum N. V. (Shell) and the banks, they have already given their consent to the Razon Group.
In the case of the lender banks, they agreed that the financial arrangements that the Udenna Group had with them would be assumed by Razon’s Prime Infra, banking sources said.
Last week, Prime Exploration Pte. Ltd., a subsidiary of Prime Infra, announced that it had already signed a share purchase agreement acquiring MEXP Holding Pte. Ltd. (MEXP) from a subsidiary of Udenna Corp. MEXP previously signed an agreement with Shell Petroleum N. V. (Shell) acquiring Shell Philippines Exploration B. V. (SPEX), which owns a 45 percent participating interest in the Malampaya.”The change in control of SPEX from Shell to Prime Infra is subject to the consent of PNOC EC and the DOE. Once such consents are given, Prime Infra will assume full ownership and control of SPEX,” it said.
The Malampaya project is one of the country’s most important power assets as it produces natural gas to power plants in Batangas City that account for around 20 percent of the Philippines’ total electricity requirements. It began operations in 2001, with the consortium’s license for the project set to expire in 2024.
“Prime Infra’s acquisition of MEXP reflects our shared commitment with the national government to help maintain energy security and independence as we transition to a renewable energy-fueled Philippine economy,” said Razon, Prime Infra chairman.
“We believe that gas is an important transition fuel in the near-term, reducing the need for baseload fossil fuels like coal. Hence, we intend to accelerate investments on the Malampaya gas field to improve the output of existing wells and, if possible, develop new wells in the area once the license extension is secured from the government,” added Razon.
Prime Infra’s investment in the expansion of Malampaya operations would also be critical in providing the necessary infrastructure that would support the development of natural gas in the area, Razon also said.
If all goes well, Prime Infra will see Malampaya added to its growing portfolio. This, in turn, will seal the Razon Group’s position as a major energy player in the country.
