‘Udenna Corp must show it can run Malampaya’
By Lenie Lectura – October 12, 2020
from Business Mirror
THE chairman of the Senate Committee on Energy said Udenna Corp. of Davao businessman Dennis Uy must prove it has the technical expertise to operate the Malampaya gas facility should it secure full ownership of the Malampaya Service Contract (SC) 38.
“Udenna itself [has no] capability. It has to demonstrate that it will develop or acquire capability. But, as it stands, wala siyang capability [it doesn’t have it]. None in the Philippines has capability of running gas and oil rig. I am not saying that they can’t develop or acquire capability. They just have to develop that with utmost capability,” said Sherwin Gatchalian.
UC earlier declared it would exercise its preemptive rights to secure the 45-percent interest of the Malampaya operator Shell Philippines Exploration B.V. (SPEx).
UC, being the majority shareholder, has the right to buy additional shares from a shareholder before these shares are made available to other interested firms. At present, UC has a 45-percent interest in SC38, while PNOC- Exploration Corp.(PNOC-EC), has 10 percent. UC bought its shares from Chevron Malampaya Llc.
UC is asking PNOC-EC to join in its pursuit to take over the gas field.
Gatchalian said even PNOC-EC is not fit to operate the gas field alone, nor does it have the financial muscle to possibly match the offer of UC to buy the shares of SPEx.
“From a fiscal standpoint, we do not have the cash to buy the remaining shares because of Covid. I have to emphasize that Covid has changed everything. Government will not have the cash from revenues and government will have to borrow to make sure we operate.”
The committee would look into the impending transaction even if the seller and the potential buyer are not state-owned firms because the country’s energy security is at stake.
“Taking over the remaining portion of Malampaya triggers issues of energy security and us, being citizens of the country, deserve to appreciate and understand whether new owners can assure us of energy security,” he said.
Gatchalian stressed that whoever takes over Shell’s interest must immediately demonstrate its technical capability and, in the future, has the capability to explore and develop other potential areas.
“PD 88 requires the approval of the DOE (Department of Energy) and, of course, in turn, the President. It is a highly technical business and national interest is at stake. The first 45 percent was a financial investment but the next 45-percent stake is a different story because [Udenna] would have full control of the operation of the Malampaya which plays a very big role in the development and economy of the country,” said Gatchalian.
What would make the situation more “sensitive” is if UC picks Chinese partners to close the Malampaya transaction. “For obvious reasons, we have issues with China on the West Philippine Sea and that angle may come in play. It will open up issues specifically related to national security,” added the senator.
China Telecom and UC earlier formed a joint venture to operate a telecommunications firm in the Philippines. UC also nominated to explore areas 7 and 8—exploration blocks in waters disputed by China.
A public hearing would be scheduled soon to tackle a proposed measure that seeks to scrutinize the impending Malampaya transaction if this poses any threat to the country’s energy security.
