Malampaya operator selling 45% stake

By Lenie Lectura – September 24, 2020
from Business Mirror

Malampaya Deep Water Gas to Power facility in Palawan

SHELL Philippines Exploration B.V. (SPEx), operator of the Malampaya deepwater gas-to-power project, said Wednesday it is selling its 45-percent stake in the offshore Palawan project that fuels five power plants with a combined capacity of 3,211 megawatts (MW).

“As part of an ongoing portfolio rationalization to simplify and increase the resilience of its business, Shell is exploring its options with a view to divest its interest in SC38 (Malampaya). Shell would ensure a smooth transition of the asset to a credible buyer who would be well placed to optimize the value from Malampaya,” said SPEx.

It did not say if there are interested buyers that have approached the upstream operating company of Shell Philippines.

SPEx said the Philippines remains an important country for Shell. It vowed “to continue to pursue opportunities where it can leverage its global expertise in line with its strategy.”

The Malampaya gas field is being maintained and operated by a consortium led by SPEx. Other members include Udenna Corp. (UC), 45 percent, and state-led Philippine National Oil Co. Exploration Corp. (PNOC-EC), 10 percent.

UC, which is led by Davao businessman Dennis Uy, earlier bought the Malampaya stake from  Chevron Malampaya Llc.

The consortium members were awarded Service Contract (SC) 38, allowing them to explore and develop an area in Northwest Palawan, Philippines.

UC said earlier that a plan has been crafted for the future development of the Malampaya field and its surrounding fields to ensure the future of Philippine energy security. The gas field could be depleted by 2024.

“The acquisition of Chevron’s interest in the Malampaya gas field marks an important milestone for Udenna, fitting strategically with our long-term ambitions of developing a sustainable clean energy business in the Philippines,” UC had said at the time it bought out Chevron.

The entry of UC in the Malampaya consortium prompted Uy’s Phoenix Petroleum Corp. and China National Offshore Oil Corp. Gas and Power Group Co. Ltd. to ask the Department of Energy (DOE) to suspend the permit to proceed with their joint LNG (liquefied natural gas) project.

“They are withdrawing their application and they want to reassess and submit a new concept. They want to revisit their LNG terminal project in lieu of the Malampaya development. They are going to tie it together,” DOE Secretary Alfonso Cusi said earlier.

Last August, Shell Philippines announced that it would cease its refinery operations and instead import finished petroleum products because it is no longer viable for the oil company to run its Tabangao, Batangas, oil refinery.

The second-largest oil company in the country blamed the Covid-19 pandemic for depressed refining margins, as fuel demand has plunged since the community quarantine was imposed by the government.

Image credits: www.shell.com