Udenna shuts out new players in Malampaya
By Lenie Lectura – September 29, 2020
from Business Mirror
Malampaya Deep Water Gas to Power facility in Palawan
DENNIS UY-LED Udenna Group wants no other new members in the Malampaya consortium, saying it will exercise its pre-emptive rights in order for the group, joined by PNOC Exploration Corporation (PNOC-EC), to secure full ownership of the Malampaya Service Contract (SC) 38.
This after the Malampaya operator Shell Philippines Exploration B.V. (SPEx) announced plans to divest itself of its 45-percent interest in SC38 as part of its portfolio rationalization efforts.
At present, Udenna Corporation (UC) has a 45-percent interest in SC38, while PNOC-EC has 10 percent. UC bought its shares from Chevron Malampaya Llc.
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.
“Should Shell not consider their existing partners but put forth a decision to sell its stake to another third party, Udenna will rely on its rights as stipulated in the agreement and as a member of the consortium, such as our pre-emptive and consent rights,” said Udenna Group spokesperson Atty. Raymond Zorrilla.
Only via bidding–SMC
Conglomerate San Miguel Corp. (SMC) said over the weekend that it is interested in acquiring the 45-percent stake of SPEx in the Malampaya gas-to-power project.
When asked if SMC would still pursue this intention after UC has declared it would use its preemptive rights, company president and chief operating officer Ramon Ang said his company prefers to participate if it’s done via an auction.
“Only if it’s bidding, we will join,” Ang said in a text message Monday.
Zorrilla commented that a potential new consortium member would have difficulty in evaluating “complicated issues” that only existing partners can deal with in a timely manner.
He added that the transfer of Shell’s interest in Malampaya needs to be resolved as soon as possible, with the remaining consortium members as the logical choice to acquire the Shell stake in order to ensure continued employment and certainty for the local workforce; and just as important, for customers and stakeholders who rely on Malampaya’s continued safe and reliable operations in a manner which minimizes disruption.
Zorrilla said only UC and PNOC-EC are “the most suitable party” to assume Shell’s interest. As such, UC is asking PNOC-EC to join in its pursuit to take over the gas field.
“The Udenna Group firmly believes that Malampaya is a high-quality asset, strategic to the future welfare and energy security of the country and welcome our partner PNOC-EC to join us in taking over the field on a 100-percent basis.
“We are keen to pursue this vision even with Shell’s exit, and that we, together with PNOC-EC, are the most suitable party to assume Shell’s interest. We will exercise this right as provided in our joint venture agreement,” stressed Zorrilla.
Too early–PNOC-EC
When asked if PNOC-EC is interested in UC’s offer, company president Rozzano Briguez, in a text message, said there is no agreement yet following the recent announcement of SPEx.
“It is too early to comment. We have our own ongoing study on all the possible implications of Shell’s divestment,” Briguez said.
However, Energy Secretary Alfonso Cusi, who sits as the chairman of PNOC-EC, said a due diligence is already in progress.
He said the due diligence started last Friday. “We will try to finish it within the week. We will do a financial and technical evaluation. So, it’s still under study,” Cusi said in a text message.
Zorrilla pointed out that the existing partners are free of any conflict of interest associated with ownership of downstream gas and electricity businesses.
Moreover, the Udenna Group firmly believes that the exit of Shell from the Malampaya gas field will in no way impact operations. It has further expressed its trust in the Filipino operating team that would continue operating the asset post any sale by Shell of their interest.
“We are fortunate that the Malampaya workforce composed of Filipinos have had the benefit of years of training by Shell and are in fact the lifeblood of the project; and it is the remaining consortium members’ responsibility to ensure that they remain secure in the knowledge that their service to the country shall continue,” he added.
Udenna’s business includes distribution and retail of finished petroleum products, as well as shipping and logistics. Udenna has, in the past few years, expanded and diversified its portfolio to include property development, education, food, gaming and tourism, infrastructure, and telecommunications.
Image credits: www.shell.com
