Sale of Malampaya operator to Prime Infra secures nod
BY LENIE LECTURA – OCTOBER 4, 2022
from Business Mirror
The Department of Energy (DOE) announced Monday that it has approved Razon-led Prime Infrastructure Capital Inc.’s (Prime Infra) acquisition of Malampaya gas project operator Shell Philippines Exploration B.V. (SPEX).
Prior the DOE approval, consents were given by the joint venture partners—UC38 LLC, with 45 percent stake, and the PNOC Exploration Corp. (PNOC-EC), with a 10 percent stake—in the Malampaya Service Contract 38 consortium.
The approval meant that Prime Infra would assume full ownership and control of SPEX once the transition process for a safe and seamless handover of operations from SPEX is completed currently targeted for November 1.
As a result of the transaction, SPEX will become a wholly-owned subsidiary of Prime Infra, which, according to the DOE, was found to be technically, financially and legally qualified as a transferee and as successor to SPEX as operator of the Malampaya natural gas project.
“We welcome DOE’s thorough review and subsequent approval of the SPEX sale given the urgency to sustain the operations of Malampaya—a vital energy installation and symbol of national pride—and to plan for the further development of the existing reserves in light of the current power under supply,” said Enrique K. Razon Jr., chairman of Prime Infra.
“We will contribute by doing all that can be done to produce as much gas as possible to sustain production in support of the power demand in Luzon.”
The DOE’s approval is conditioned on SPEX remaining to be a subsidiary of Prime Infra, and on the continuing validity of Prime Infra’s commitments and undertakings to the DOE in respect of SPEX’s obligations as operator of Malampaya SC 38.
The DOE approval marks the initial foray of Razon’s infrastructure arm into the upstream energy market.
“Prime Infra is well-positioned to carry on the world-renowned track record of the Malampaya asset and therefore, the next urgent step for the company is to sustain and expand gas production while we promptly address the license extension for SC38,” said Prime Infra President and CEO Guillaume Lucci.
Prime Infra had committed to deliver outstanding operational performance and further the potential of SC38 covering the Malampaya deep-water gas-to-power project to ensure continuity of production as long as the reserves support it.
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 power up to 20 percent of the Luzon’s total electricity requirements. It began operations in 2001, with the consortium’s license for the project set to expire in 2024.
Prime Infra’s energy portfolio, added Lucci, has always been aligned with the national government’s objective towards attaining energy independence and security, while reducing the country’s reliance on fossil fuels.
