Solon sees no hurdle in Razon’s takeover of Malampaya project

BY JOVEE MARIE DE LA CRUZ – JUNE 6, 2022
from Business Mirror

BusinessMirror file photo

The chairman of the House Committee on Strategic Intelligence on Sunday said he sees no hurdle to Philippine ports and gaming tycoon Enrique Razon Jr.’s takeover of the Malampaya deepwater gas-to-power project from Dennis Uy’s Udenna Corp.

Surigao del Sur Rep. Johnny Pimentel, the panel’s chairman, said Razon would be “in a strong position” to take advantage of Malampaya’s existing infrastructure as the springboard for the development of a potential integrated gas hub.

“We in Congress have always maintained that private parties are free to get in and get out of existing petroleum service contracts,” Pimentel said in a statement.

“These transfers of operating and/or participating interests in petroleum service contracts are private commercial transactions involving the sale of investments between corporations.”

In these transactions, he said the role of the Department of Energy (DOE) is merely to oversee the orderly handover of operations with a view to ensuring project continuity and development.

Malampaya’s 504-kilometer undersea pipeline delivers gas to power plants in Batangas that in turn supply 20 percent of the country’s demand for electricity.

Prime Infra Holdings, Inc., led by Razon, is acquiring a controlling stake in the Malampaya deep-water gas-to-power project from Uy’s Udenna Corp.

A recent statement from the infrastructure arm of the Razon Group said the acquisition process has kicked off and will close subject to the consent of various parties including the DOE and the Philippine National Oil Co.-Exploration Corp. (PNOC-EC). The transaction, it added, will also go through other regulatory and lenders’ approvals within that period.

PNOC-EC has a 10-percent stake in the Malampaya gas project, which has been providing about 20 percent of the country’s power needs.

Uy’s UC38LLC has a 45-percent stake in the gas project. UC38 bought its Malampaya interest from Chevron Malampaya.

The remaining 45 percent is held by Udenna Corp.’s Malampaya Energy XP Pte. Ltd.  Malampaya operator Shell Philippines Exploration B.V. (SPEX) earlier sold its stake to Malampaya Energy. PNOC-EC, however, withheld its consent and the DOE has yet to approve the deal.

Uy’s combined 90-percent share in the Malampaya gas field is valued at roughly $1 billion. Prime Infra, however, did not say how many shares it is buying.

Moreover, Pimentel said Razon, through publicly listed Apex Mining Co., also has a 30-percent participating interest in the other petroleum service contract that contains the Sampaguita gas discovery located 250 kilometers southwest of Malampaya.

Pimentel said he would not be surprised if Razon also ends up acquiring a majority stake in Sampaguita.

Dubbed as the next Malampaya, Sampaguita is estimated to contain anywhere from 3.5 trillion to 4.6 trillion cubic feet of gas.

The estimate is comparable to if not bigger than Malampaya’s 3.4 trillion cubic feet when it was first discovered in 1989.