By Myrna Velasco
American energy giant Chevron Corporation is formally seeking “right of first refusal” from its partners Shell Philippines Exploration B.V. (SPEX) and state-run Philippine National Oil Company-Exploration Corporation (PNOC-EC) in the multi-billion Malampaya gas-to-power project relating to the “unsolicited buyout offer” of Udenna Corporation of businessman Dennis Uy.
(Chevron.com / MANILA BULLETIN)
According to government sources, the official correspondence was sent by Chevron to its partners, informing them of the offer of Udenna Corporation, which the American firm reportedly classified as an “enticing offer.”
A source from the state-run company noted that “Chevron made calculations on how much more it could earn from the Malampaya project in the remaining four years of the production contract, and when it crunched the numbers, the offer of Udenna would be a viable one, so it is inclined to the sale proposition.”
It was further gathered from sources that Chevron’s exit in the upstream oil and gas business in Southeast Asia might be warranted after losing a deal that it has been eyeing in Indonesia – and there are also reports that it might do the same in another market in the region.
SPEX and Chevron hold the majority stake of 45-percent each in the Malampaya deep water gas project, of which Service Contract (SC) 38 will expire in 2024.
SPEX confirmed that it “received advice from our Malampaya joint venture partner, Chevron Philippines, on its decision to sell its interest in the Malampaya project,” but it qualified that “our focus remains on operating the Malampaya natural gas facilities safely, reliably and efficiently to ensure we keep powering the Philippines with cleaner-burning, domestic natural gas.”
In the joint operating agreement (JOA) signed by the parties, it was explicitly prescribed that current partners in the gas field project can exercise their right of first refusal in case any of the interest-holders would decide to sell their stake in the Malampaya project.
Chevron’s targeted exit in the Philippine oil and gas industry was reportedly anchored partly on uncertainties surrounding the Malampaya consortium’s application for license extension – that is still currently pending with the Department of Energy.
Atty Raymond Zorrilla, senior vice president of Phoenix Petroleum Philippines Inc. which is an affiliate company of Udenna, admitted that an offer for the buyout of Malampaya had been tendered with Chevron.
When asked if the company will have a partner in the acquisition, he said “none yet,” but he did not specify if they have been negotiating or talking to other party right now that has experience in the upstream petroleum sector.
Up until this stage, however, Phoenix Petroleum still has that standing partnership with China National Offshore Oil Corporation (CNOOC) for investments both in the upstream and downstream gas sectors – but company officials will not say if the same tie-up will be involved in the Malampaya acquisition.
Also this week, PXP Energy of the Pangilinan group submitted an unsolicited offer via the Department of Energy (DOE) to have its stake in the Malampaya project and will have that transformed eventually into a gas hub.
PXP Energy previously sealed a tie-up with Uy and CNOOC on prospective oil and gas exploration ventures, but their deal had been terminated March of this year.