First Pacific submits ‘final non-binding offer’ for Malampaya stake

Published March 1, 2021, 4:43 PM by Myrna M. Velasco
https://mb.com.ph/2021/03/01/first-pacific-submits-final-non-binding-offer-for-malampaya-stake/

A consortium led by Hong kong-based First Pacific Company Limited of businessman Manuel V. Pangilinan has submitted last week its “final non-binding offer” to acquire the 45-percent stake of Shell Philippines Exploration B.V. (SPEX) in the multi-billion dollar Malampaya deep water gas-to-power project.

In a briefing,, Pangilinan, who is the chief executive officer (CEO) of First Pacific, disclosed that their bid for the Malampaya acquisition was submitted last Friday (February 26).

“We have submitted our final non-binding offer to Shell, so let’s see,” he told reporters, expounding that the process being run by Shell for its equity unloading at Malampaya was a sort of “contested offer.”

Pangilinan added that aside from First Pacific, another company in the MVP group involved in the targeted Malampaya equity purchase is Philex Mining Corporation, which is a part owner of PXP Energy Corporation, the upstream petroleum company of the conglomerate that holds 70-percent interest in Forum Energy, the holder of Service Contract 72 for the Recto Bank oil and gas prospect.

He added that two more companies are part of the consortium that submitted the tender in the

prospective Malampaya shareholdings purchase, but he has not named the other parties yet. “It’s a group effort that made the offer,” he just noted.

Shell has engaged JP Morgan as its transaction adviser in the divestment of SPEX’s 45-percent equity in the Malampaya venture. The sale process is a decision of the global management of Shell and is run by its team in Singapore.

Pangilinan said they are not aware how many bidders there are in the Shell stake unloading, but if First Pacific group will gain success in that prospect, it will tie in the Malampaya facility with the conglomerate’s exploration and development targets at Recto Bank and the broader investment plan of the MVP group into gas-fired facilities.
It was in September last year when Shell informed the Philippine government – through the Departments of Energy and Finance – on its planned divestment of shareholdings in the Malampaya asset.

The gas field’s development was underpinned by Service Contract (SC) 38, which is due to expire in 2024; and there is no definitive action yet on the part of the government relative to the Malampaya consortium’s bid for license extension.

As initially assessed, if the service contract of the gas field will be extended, additional gas may still be extracted for the next 6-7 years and these could still continually feed on the requirements of the more than 3,200 megawatts of gas-fired power facilities in the country.
The exit of Shell in the Malampaya field is being closely watched by the government – including Congress, because SPEX is the operator of the field, hence, there are emerging questions on the technical capacity of the entity that will be buying its interest in the venture.