Malampaya sale: DoE sets review

May 25, 2021 12:25 AM By Maria Romero
https://tribune.net.ph/index.php/2021/05/25/malampaya-sale-doe-sets-review/

Department of Energy (DoE) Secretary Alfonso G. Cusi on Monday said his office will evaluate the transaction once it is completed to ensure that it passes any possible regulatory hurdle that may arise.

“Once the transaction has been completed at the consortium level, it will still be submitted to the DoE for its review and approval in accordance with Presidential Decree No. 87 otherwise known as the Oil Exploration and Development Act of 1972 (PD87),” Cusi said.

“For its part, 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 according to the terms of SC38 and PD87,” he added.

Cusi also noted that the DoE will ensure that the multi-billion transaction will not hit any regulatory snag.

The energy chief pointed out that any agreement between Udenna Corp. subsidiary Malampaya Energy XP Pte Ltd. and Shell Philippines Exploration B.V. (SPEX) on the acquisition of SPEX’s 45 percent participating interest in Petroleum Service Contract No. 38 (SC38) is a private business transaction.

“In other words, the Department of Energy did not take part in the decision of SPEX to sell, the bidding or negotiations that ensued, and its outcome,” Cusi said.

Cusi underscored that transfer of a participating interest in SC38 Malampaya Consortium is governed by the terms of the Joint Operating Agreement (JOA) entered into by the members.
“Under the JOA, all parties must first consent to a sale of any or all participating interest,” he said.

The sale has a base consideration of $380 million, with additional payments of up to $80 million between 2022 to 2024 contingent on asset performance and commodity prices.
Subject to partner and regulatory consent, the transaction is targeted to complete by the end of the year.

If all goes according to plan, Udenna Corp. will assume the operatorship of the gas field, since that has been the function of SPEX in the multi-billion gas field project.
It can be recalled that Shell is the second multinational giant to exit from the Malampaya venture.

The first one to give up its share was American firm Chevron Corporation, which sold its 45-percent stake in the project to UC38 LLC — another unit of Udenna Corp. for $565 million.

The new Malampaya joint venture partners are now just Udenna and state-run Philippine National Oil Company-Exploration Corporation, which holds the remaining 10 percent of the project.

Malampaya natural gas field has been operating since 2002 and has contributed over $10 billion in revenues to the Philippine government to date.

The contract of the Malampaya natural gas field will expire in 2024. The consortium involved in developing the project had signified interest to extend the contract.