MVP Group, JP Morgan in talks for 45% SPEx stake
By Lenie Lectura – October 26, 2020
from Business Mirror
Malampaya gas field in offshore Palawan. File photo
THE group of Manuel V. Pangilinan is in talks with JP Morgan to assist the group in its interest to buy the 45-percent stake of Shell Philippines Exploration B.V. (SPEx) in the Malampaya gas-to-power project.
“We are looking at it. We’ve been talking to JP Morgan who has been advising Shell on their share sale in Malampaya,” Pangilinan said in a press briefing on the third-quarter financial results of the Manila Electric Co. (Meralco) on Monday afternoon.
Pangilinan said PXP Energy Corp. could be used as the vehicle to acquire the stake of SPEx.
PXP Energy holds interest in Service Contract (SC) 72 or the contract to explore Recto Bank in the West Philippine Sea through London-listed Forum Energy Plc. It also has a direct operating interest in SC 75 northwest Palawan.
Exploration activities in the areas of SC 72, 75 and 59 were
suspended due to the West Philippine Sea dispute. However, President Duterte recently approved the recommendation of the Department of Energy (DOE) to lift the suspension of petroleum activities and the resumption of exploration in those areas.
PXP received last week the “Resume-to-Work” notice from the DOE.
Incidentally, Pangilinan said another survey would be conducted before it proceeds to drill wells. “We are preparing our work program for both SC 72 and 75. We don’t know yet when it will be finished but we should submit it to the DOE for approval. If they approve it, the next step is to drill two exploratory wells. But we need to do another survey because the oil rig operator would need an updated survey to determine the ecology of the ocean floor,” Pangilinan said.
SMC, too
Aside from Pangilinan’s group, conglomerate San Miguel Corp. (SMC) earlier confirmed its interest in acquiring the 45-percent stake of SPEx.
SPEx, operator of the Malampaya gas field, earlier announced plans to divest itself of its entire stake as part of its portfolio rationalization efforts.
But Dennis Uy-led Udenna Corp. (UC), which currently has a 45-percent stake in the project, said it would invoke its pre-emptive and consent rights over the stake sale.
The Philippine National Oil Co.-Exploration Corp. (PNOC-EC), which holds the remaining 10 percent, is being invited by UC to join in the latter’s takeover plan.
The divestment of SPEx and Uy’s interest in the Malampaya gas field prompted Senator Sherwin Gatchalian to call for a Senate inquiry to look into the compliance by the government and the Malampaya consortium with Presidential Decree No. (PD) 87 or the Oil Exploration and Development Act of 1972, and the impending sale of the 45-percent stake of SPEx.
“We’re looking at the larger picture which is the energy security of the country. So we have to make sure that whoever takes over that portion of Shell should have the technical capability. They should be able to demonstrate that they can operate this rig competently with technical expertise and in the future, if ever that area has potential, they should be able to demonstrate that so they can explore and develop that area,” Gatchalian said.
Gatchalian, along with Senate President Vicente C. Sotto III and Senator Panfilo Lacson, filed Senate Resolution No. 533 citing the need for Congress to be apprised of the government’s plans for SC 38.
Section 4 of PD 87 states that the government may directly explore for and produce indigenous petroleum and may also indirectly undertake the same service contracts, provided that the contractor is technically competent and financially capable to undertake the operations.
Located approximately 50 kilometers northwest of Palawan, Malampaya is the country’s main domestic source of energy, fuelling five power plants as it accounts for 20.08 percent of power generation in the entire country and 29.3 percent of power generation in Luzon.
It has likewise provided the government a total revenue of P261,681,610,752.59 from January 2002 to December 31, 2019, which is a crucial source of funding for various energy resource development programs and initiatives.
Given its declining output, one of the issues facing Malampaya includes whether or not it should be extended or the government should opt to manage and operate it, according to Gatchalian.
“This is not plain and simple business transaction. It affects all of us because of energy security issues. We want to be assured that we will not run out of fuel supply in the immediate future,” Gatchalian said.
