Cusi sees edge for Udenna in purchase of Shell’s Malampaya stake

Published October 20, 2020, 2:08 PM

by Myrna M. Velasco

Anchoring it on the ‘right to match’ provision of the joint operating agreement (JOA) under Service Contract (SC) 38, Energy Secretary Alfonso G. Cusi indicated that Udenna Corporation of businessman Dennis Uy may likely have an edge in acquiring the 45-percent stake being unloaded by Shell Philippines Exploration B.V. (SPEX) in the Malampaya gas field asset.

Energy Secretary Alfonso G. Cusi (Source: https://www.bloomberg.com)
Energy Secretary Alfonso G. Cusi (Source: https://www.bloomberg.com)


That kind of ‘advantage’, according to the energy chief, is in parallel shared by state-run Philippine National Oil Company-Exploration Corporation (PNOC-EC), being the other member in the SC 38 consortium for the gas production facility.



“The other members of the consortium have that ‘right to match’ the proposal, so that is a bit of an advantage, not only for Udenna but also for PNOC-EC,” Cusi stressed.



The DOE secretary said Shell is currently is in discussion with several prospective buyers of its Malampaya interest, a divestment process that the Royal Dutch Shell subsidiary had publicly made known last month.

Following that announcement, Udenna sounded off plans to partner with PNOC-EC in the targeted purchase of SPEX’s interest in the gas field, noting that it will leverage on the gained expertise of current employees/workforce in the facility on its bid to take over the field’s operations.

Udenna currently has 45-percent shareholdings in the Malampaya asset, a majority interest that it acquired from American firm Chevron in a transaction that was finalized in March this year.

Given the pronouncement of Udenna to buy into Shell’s interest, Senate Committee on Energy Chairman Sherwin T. Gatchalian noted the divestment of that stake has to be assured that it is done prudently, because the acquiring-entity will also take over the field’s operations and will be making tough decisions relating to its operational and commercial viability.

“This is not a plain and simple business transaction. It affects all of us because of energy security issues. We want to be assured that we will not run out of fuel supply in the immediate future,” the lawmaker said.

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 shell.com – google)

The Malampaya field is supplying fuel to five power plants of more than 3,200-megawatt aggregate capacity; and they account for sizeable generated capacity being fed to the Luzon grid.

“We’re looking at the larger picture which is the energy security of the country. So we have to make sure that whoever takes over that portion of Shell should have the technical capability,” Gatchalian emphasized.

He added the buyer of Shell’s interest “should be able to demonstrate that they can operate this rig competently with technical expertise.”

And given earlier studies that Malampaya may still have residual gas beyond the contract life of SC 38, he indicated the future operator of the field “should be able to demonstrate that they can explore and develop that area.”

The solon said “one of the issues facing Malampaya includes whether or not it should be extended or the government should opt to manage and operate it.”

 
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