SMC opts out of Malampaya stake bidding
By Myrna M. Velasco – March 18, 2021, 3:59 PM
from Manila Bulletin
Diversified conglomerate San Miguel Corporation (SMC) has decided not to submit a tender for the 45-percent stake in the multi-billion Malampaya gas field venture that is currently being unloaded by Shell Philippines Exploration B.V. (SPEX), the operator of the facility which is a subsidiary-firm of multinational energy giant Royal Dutch Shell.
“We did not submit a bid for Malampaya,” SMC President Ramon S. Ang told reporters in a virtual press briefing on Thursday (March 18).
He qualified that the company originally targeted to join the bidding, but an outcome of SMC’s study on the viability of the prospective asset acquisition subsequently prompted it to drop the plan.
SMC has been among the Filipino firms that kept an eye on the Malampaya equity divestment – along with the First Pacific Company Limited and Philex Mining Corporation of tycoon Manuel Pangilinan; while the group of businessman Dennis Uy indicated intent to invoke its ‘right of first refusal’ under the joint operating agreement (JOA) of Malampaya’s Service Contract 38.
Uy’s Udenna Corporation went to the extent of inviting the government – through state-owned Philippine National Oil Company- Exploration Corporation (PNOC-EC) – to be its partner in acquiring the 45-percent shareholdings of SPEX in the Malampaya gas field.
Early this month, Pangilinan divulged to media that a consortium led by First Pacific submitted to Shell’s team in Singapore a “final non-binding offer” for their interest to acquire Shell’s Malampaya stake.
With SMC not firming up its planned offer, it will only be First Pacific group and the target of Udenna to invoke its rights under Malampaya’s JOA that may eventually turn up as Philippine-leaning participation in the equity sale for the gas production facility.
Notably, it was Udenna Malampaya LLC which purchased the 45-percent stake of American firm Chevron in the gas field project – that was in a US$565 million merger and acquisition (M&A) deal that closed March of last year.
The Malampaya gas field uses an innovative and sustainable deepwater technology for recovering natural gas from the deepwater reservoir in northwest Palawan. ( note: image from shell.com – google)
On plans to widen its shareholdings in the gas field by buying into Shell’s stake, Udenna stated that based on its assessment, “Malampaya is a high quality asset, strategic to the future welfare and energy security of the country.”
The Uy-led firm thus formally asked PNOC-EC “to join us in taking over the field on a 100-percent basis.” PNOC-EC is minority shareholder in the Malampaya venture with 10-pecent stake.
The SC 38 license of the Malampaya gas field will expire in 2024; and while there are talks with the State – via the Department of Energy – on prospective license extension, a final decision on this has yet to be rendered.
The energy department previously apprised lawmakers in a Senate hearing that if Malampaya’s license will be extended, it may still be able to produce fuel for the country’s existing gas fleets of more than 3,200 megawatts for the next 6-7 years.
