Listed firm Phoenix Petroleum Philippines Inc., another company of businessman Dennis Uy, is reportedly offering to buy the Malampaya ‘banked gas’ of state-run Philippine National Oil Company (PNOC) that had been previously valued between $700 million to $800 million, approximately P33 billion to P38 billion.
The interest of Phoenix in the banked gas was revealed by PNOC President and CEO Reuben S. Lista, who also revealed said that government-run firm Power Sector Assets and Liabilities Management Corporation (PSALM) and First Gen Corporation of the Lopez group as potential contenders.
Despite the impending ownership changeover in the majority shares of the Service Contract (SC) 38 license of the Malampaya project, the PNOC chief executive indicated that there is continuing interest by some companies to purchase the banked gas.
“There are plenty of offerors on the banked gas. We are evaluating the best offer,” Lista said, albeit he has not specified any timeframe on when the gas will be extracted from the field and when it will be funneled to the interested buyer.
There had been previous stipulations from PNOC executives and even Department of Energy (DOE) officials that the ‘banked gas’ can be used as equity if the government will target to increase its equity in SC 38 of the Malampaya projec. Lista cited this possibility "if the stars will align."
It was in September 2017 when PNOC attempted to sell the banked gas, but the offers it cornered have been lower than the price it had cast for the sale of the commodity. A negotiated sale with First Gen in 2018 had not prospered and it was also due to pricing concerns.
The ‘banked gas’ had been primordially contracted for the 1,200-megawatt Ilijan power plant, but it had ‘dispatch constraints’ during the initial years of its commercial operations between 2001 to 2004.
That led to the ‘banked gas’ accumulation – that was then subsequently logged as “stored fuel’ in the financial books of NPC, being the government entity that had underwritten the gas sale and purchase agreement (GSPA) for the Ilijan plant.
Nevertheless, under the Arroyo administration, a government-to-government transaction was consummated leading NPC’s sale of the ‘banked gas’ to PNOC for just half of the asset’s value – or from P35 billion to P14.4 billion.
In a related development, the DOE stated that the transaction between Shell Philippines Exploration B.V. (SPEX) and Udenna Corporation subsidiary Malampaya Energy XP Pte Ltd. “is a private business transaction between the parties,” hence, the agency “did not take part in the decision of SPEX to sell, the bidding or the negotiations that ensued, and its outcome.”
The energy department explained that the transfer of interest between parties in the Malampaya consortium shall be governed by the terms of the shareholders’ joint operating agreement (JOA), legally bound by SC 38.
Nevertheless, the agency emphasized that “once the transaction has been completed at the consortium level, it will be submitted to the DOE for its review and approval,” in keeping with the prescriptions of Presidential Decree 87 or the Philippine Oil and Gas Law.
It will be in that part, the DOE said, that it will “accordingly and judiciously evaluate the legal, financial and technical aspects of the transaction, and its impact to the obligations of consortium to the Philippines government.”