Senator Sherwin Gatchalian on Friday, April 16, urged the Department of Energy (DOE) to justify its decision to approve Udenna Corporation’s acquisition of Chevron’s 45-percent stake in Malampaya, saying it has the responsibility to explain to power consumers the consequences of the merger.
Gatchalian is referring to the transfer of Chevron Philippines’ ownership in Malampaya LCC to UC Malampaya Philippines starting last year. Udenna earlier announced it has absorbed the technical team and core experts of Chevron Corp. t ensure the continuous operation of the gas-producing field.
The senator, who chairs the Senate Committee on Energy, recalled that the DOE’s legal department, during the panel’s hearing on November 10, 2020, said that such transaction is governed by a DOE circular requiring an evaluation of the technical, legal and financial capacity of the company.
Gatchalian also said Presidential Decree 87 also requires the approval of the DOE on such transfer of shares in upstream petroleum ventures.
Likewise, in the joint operating agreement signed by the members of the consortium operating Malampaya (Shell, Chevron and PNOC-EC), the senator explained there is a provision that the party or the transferer has to ensure that they get all prior permits or approvals from the government before the sale of shares are to be finalized.
“UC Malampaya Philippines completed on March 11, 2020 its acquisition of Chevron Malampaya LLC, the holder of a 45-percent interest in Malampaya gas field project, and it was only in October 28 last year that the DOE has been officially provided with the documents on the Malampaya share’s divestment,” Gatchalian said in a statement.
“Prior to the DOE announcement on their approval of the sale, it is worthy to note that the Senate Energy Committee has sought the department’s submission of its legal basis in reviewing the transaction, whether there is a need for another issuance to clarify if these kinds of transactions would need executive approval or not, and their recommendations to the legislature on possible amendments on PD 87,” he pointed out.
The senator stressed the need for an explanation from the DOE’s end on how they could justify their approval of the transaction.
“This involves not just an ordinary asset. It demands a lot of experience, technology, and global connections. The oil and gas industry is a global business. The technical know-how is also required and this is because we’re looking at the larger picture which is the energy security of the country,” the lawmaker explained.
“The consumers are the primordial concern. We want to make sure that the consumers will receive 24/7 electricity at a least cost manner. We have laws and regulations that govern all of these transactions, and those laws are meant to create a stable environment in the power sector,” Gatchalian stressed.