Dennis Uy, PNOC-EC interested to acquire Shell stake in Malampaya

Published September 28, 2020, 1:28 PM

by Myrna M. Velasco

Businessman Dennis Uy has formally indicated that his company Udenna Corporation, along with state-run Philippine National Oil Company-Exploration Corporation (PNOC-EC) would be interested to acquire the 45-percent stake being unloaded by Shell Philippine Exploration B.V. (SPEX) in the multi-billion dollar Malampaya gas field project.

Dennis Uy

In a statement to the media, Udenna Group Spokesperson Raymond T. Zorrilla said the remaining consortium-members are seen as “the logical choice to acquire the Shell stake in order to ensure continued employment and certainty to the local workforce and as importantly to customers and stakeholders who rely on Malampaya’s continued safe and reliable operations in a manner which minimizes disruption.”

He said Uy’s company will corner the shareholdings of Shell in a joint venture with PNOC-EC so they can have a full hold of the gas field venture – even on the operations sphere of the business; and this will be done by invoking their right of first refusal in the sale process.

The remaining shareholders in Malampaya are UC Malampaya Philippines Pte. Ltd. which is a subsidiary of Udenna Corporation and a majority shareholder with 45-percent interest in the gas field; and then PNOC-EC which holds the balance of 10-percent interest.

Zorrilla emphasized their company “firmly believes that Malampaya is a high quality asset, strategic to the future welfare and energy security of the country and welcome our partner PNOC-EC to join us in taking over the field on a 100-percent basis.”

PNOC-EC’s parent firm Philippine National Oil Company (PNOC) already indicated earlier that the government has its sights set on the Shell stake that had been announced for divestment last week.

Zorrilla stressed Udenna and PNOC-EC will invoke their right as provided under the joint venture agreement that they have under the Service Contract (SC) 38 of the Malampaya field. “We will assume this right as provided in our joint venture agreement,” the Udenna executive reiterated.

He further noted “should Shell not consider their existing partners but put forth a decision to sell its stake to another third party, Udenna will rely on its rights as stipulated in the agreement and as a member of the consortium, such as our pre-emptive and consent rights.”

It was also Udenna which purchased the 45-percent share of American energy giant Chevron in the Malampaya project in a transaction that was sealed in March this year.

Following Shell’s sale plan announcement, Udenna stipulated that it will “work together with its other partner PNOC-EC to ensure the ongoing reliable and safe operations of the asset.”

The Malampaya gas field uses an innovative and sustainable deepwater technology for recovering natural gas from the deepwater reservoir in northwest Palawan. ( note: image from – google)

The contract of the Malampaya field is due to expire in 2024, but the SC 38 consortium currently has pending application for license extension with the Department of Energy (DOE). Once extended, the production life cycle of the field is seen extendible for another 6-7 years.

The Malampaya field supplies gas fuel for the electricity generation of more than 3,200 megawatts of power capacity, which underpins the energy requirements primarily of Luzon grid, the country’s economic center.

In the continued operations of the gas production facility, Zorrilla said “we are fortunate that the Malampaya workforce composed of Filipinos have had the benefit of years of training by Shell and are in fact the lifeblood of the project.”

He added it will be the responsibility of the remaining consortium-members “to ensure that they remain secure in the knowledge that their service to the country shall continue.”

Zorrilla asserted “we are keen to pursue this vision even with Shell’s exit, and that we together with PNOC-EC, are the most suitable party to assume Shell’s interest.”

He qualified that if a new consortium-member will enter, there will be complicated issues for it to re-evaluate “which would take time and it may be difficult for anyone other than the existing partners to assess the outcome of these matters in a timely manner.”

The company executive further said “the exit of Shell from the Malampaya gas field will in no way impact operations.”