DoE calls stake sale in Malampaya operator a ‘private transaction’

 May 24, 2021 | 8:05 pm

https://www.bworldonline.com/doe-calls-stake-sale-in-malampaya-operator-a-private-transaction/

THE Department of Energy (DoE) said Monday that the sale of Malampaya gas field operator Shell Philippines Exploration B.V.’s (SPEx) participating interest to Udenna Corp. unit Malampaya Energy XP Pte Ltd. is a private transaction, but added that it has the power to approve the deal.

Shell Petroleum N.V. signed an agreement with Malampaya Energy for the sale of its 100% stake in SPEx, which holds a 45% operating interest in petroleum service contract (SC 38), which includes the Malampaya gas field.

On Thursday, Shell said that the sale’s base consideration is $380 million, with additional payments of up to $80 million between 2022 to 2024 contingent on asset performance and commodity prices.

“The DoE did not take part in the decision of SPEx to sell, the bidding or negotiations that ensued, and its outcome…. Any agreement between (the) Udenna Corp. unit and SPEx on the acquisition of SPEx’s 45% participating interest in SC 38 is a private business transaction between the parties,” it said in a statement on Monday.

It said the SC 38 Malampaya consortium is governed by the joint operating agreement, which states that all parties must first agree to the sale of any or all participating interests.

Once the consortium completes the transaction, it will be reviewed by the department for approval in line with the Oil Exploration and Development Act of 1972 or Presidential Decree No. 87.

“The DoE will, accordingly and judiciously, evaluate the legal, financial, and technical aspects of the transaction, and its impact on the obligations of the consortium to the Philippine government,” the department said.

In a statement last week, Senator Sherwin T. Gatchalian urged the Energy department to disclose its plans and programs for Malampaya in light of the Shell-Udenna agreement and the upcoming expiration of the consortium’s contract in less than three years.

On Thursday, Mr. Gatchalian, who chairs the senate committee on energy, said the panel will conduct an inquiry into the sale of the SPEx stake, and the basis for any DoE decision to approve the sale.

“It is critical for the DoE to ensure that whoever gets hold of Shell’s interest should have, not just similar experience or capacity, but more so the technical, financial and legal capability to operate the Malampaya project or to be a service contractor,” he was quoted as saying.

Earlier, Mr. Gatchalian said the remaining reserves of the Malampaya project will be depleted by the first quarter of 2027, citing estimates from the Energy department.

Other firms that hold interests in SC 38 are UC38 LLC, a Udenna Corp. subsidiary, with 45%, and Philippine National Oil Co. Exploration Corp. with 10%. — Angelica Y. Yang