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Sunday, November 28, 2021 Vol. 17 No. 51
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Controversial Malampaya deal undergoes ‘fine-toothed’ scrutiny before sale
A
By Lenie Lectura
PNOC is the partner of SPEX. The review is independent from ours. Our perspective is from the regulators’ side,” added the DOE official.
LL eyes are now on the Department of Energy (DOE) that would either approve or disapprove the sale of the entire stake of Malampaya gas operator Shell Philippines Exploration B.V. (SPEX) to a subsidiary of Davaobased businessman Dennis Uy’s Udenna Corporation (UC).
The DOE is expected to come out with a decision, a crucial one at that, since transaction will affect the future of the gas field’s operation and the continuous supply of energy in the country. DOE Assistant Secretary Gerardo Erguiza Jr. said an ongoing review on the controversial deal— worth as much as $460 million—is being conducted by various units of the DOE. The review is expected to end soon, he said. These units will then submit their report to the bureau heads, which, in turn, will make their respective recommendations and submit these to the agency’s senior officials before these are turned over to DOE Secretary Alfonso Cusi for final approval.
Under ‘meticulous’ study
ERGUIZA said a “substantial portion of the review” has been done. “It’s undergoing the process now. All groups involved are moving and are doing their best, studying it very meticulously.” There is no target date as to when the DOE would be ready to release its decision. “For us, we want to complete it as soon as possible,” said Erguiza. Shell Petroleum N.V. sold last May its 100-percent shareholding in SPEX, owner of a 45-percent operating interest in Service Con-
tract (SC) 38, the contract that covers the Malampaya gas field, to Malampaya Energy XP Pte. Ltd. The deal is still subject to DOE’s review and approval in accordance with Presidential Decree 87, or the Oil Exploration and Development Act of 1972. “The agreement in this deal states that the DOE review is a precondition, unlike in the Chevron-Udenna, which did not provide a similar precondition,” he explained. Once this deal succeeds, the group of Uy will have 90-percent ownership in the Malampaya gas field as Udenna unit UC38 Llc. already acquired Chevron’s 45-percent stake in Malampaya. It is not only the DOE’s green light that needs to be secured by the seller and the buyer. Philippine National Oil CompanyExploration Corp. (PNOC-EC), a member of the Malampaya consortium that holds 10-percent interest in the gas project, also needs to express its consent. The joint operating agreement signed by the members of the Malampaya consortium governs the transfer of participating interest in SC 38, thus the sale of any or all participating interest should be consented to by the consortium. “Our approval is useless if it’s not approved by PNOC. It has to be a parallel approval because
PESO EXCHANGE RATES n US 50.4600
Stringent controls
PNOC-EC posted on its website that the sale of the shares of SPEX in the Malampaya has not reached its final stage. “The statements of our detractors saying that this is a done deal is entirely false and at the same time, it belittles the efforts of our board of directors and officers who have put numerous options on the table, making sure that there is sufficient evaluation to make certain the best choice emerges, not just for the company, but most importantly, for the energy security of this country and the Filipino people.” Both agencies claimed to have put in place stringent control measures so they can come up with a sound business decision.
Precious resource THE Malampaya Deep Water Gas-to-Power Project, located 50 km offshore Northwest Palawan.
GATCHALIAN: “I think it’s really quite premature and unethical for Malampaya Energy to negotiate with the government. It’s too presumptuous in fact.”
PHOTO COURTESY SHELL
CUSI: “As they say, damned if you do, damned if you don’t.” ROY DOMINGO
THE Malampaya gas project has become the country’s most significant oil and gas upstream development, supplying 19.16 percent of the country’s supply of electricity for 2020, and providing a crucial source of income for the government with a total net national government share amounting to P261,681,610,752.59 since it began commercial operations in 2002 until 2019. However, gas is fast depleting and, worse, SC 38 will expire in 2024. The asset will only be able to service 6 percent of Luzon by 2024 unless immediate actions are taken to arrest its quick decline and prevent its eventual depletion by 2027. UC, according to its president Raymundo Martin Escalona, will focus on an urgently needed rejuvenation program to stem the decline of Malampaya after a seven-year hiatus in exploration activities. Continued on A2
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Source: BSP (November 26, 2021)
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TO SELL OR NOT TO SELL
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