Malampaya gas facility buyer Udenna Corporation of businessman Dennis Uy has finally raised alarm bells that the field will already suffer from gas production shortfall starting next year and this could worsen the power crisis problems of the Philippines.
“The country will surely be short of natural gas by 2022 and further exacerbate the worsening electricity situation,” the Uy-led Malampaya Energy XP Pte Ltd has explicitly laid down in a statement sent to the media.
The gas output deficiency of the Malampaya field started escalating on its warning signs this year – given the recurring ‘gas restriction’ predicaments of the facility that resulted in de-rated electricity generation of the country’s gas-fired plants.
With that inevitable production snag that the gas field will be distressed with, Malampaya Energy indicated that it will “support the government’s yearning for energy security,” hinting that it will be the one to pursue fresh round of drillings that could possibly shore up the gas field’s output as well as extend its production life cycle.
“Malampaya Energy is all out to rejuvenate Malampaya through a drilling campaign once the transaction is completed,” the Udenna firm stressed.
Until the last Senate hearing on July 14, the Department of Energy (DOE) was still in denial that there is a gas production shortage problem at the Malampaya field, with the agency insinuating that the facility is still at its optimal output; and it had instead blamed the media for reporting on the field’s gas restriction quandary.
Nevertheless, this admission of Udenna on ‘gas supply shortage’ in 2022, is a clear manifestation of the country’s energy security predicaments that the DOE has not been concretely addressing – that’s despite demand of stakeholders for clear-cut information on Malampaya’s gas production capacity starting next year until the expiration of its service contract in 2024.
For doubts cast over the financial capacity of Malampaya Energy to take over the field’s operatorship as well as its acquisition of the 45-percent shareholdings of Shell Philippines Exploration B.V. (SPEX), the Uy-led company stated that “Malampaya Energy will have over P10 billion of cash.”
And on its questioned capitalization of just US$100, Malampaya Energy argued that “the capitalization of the company is only one element of a capital structure and is not on its own a reflection of the company’s ability to fund the deals.”
Udenna qualified that “the acquisition of SPEX is 100-percent underwritten and funded via bank loans from our existing lenders,” emphasizing that “these full facility agreements have been provided to the relevant decision-makers.”
Uy’s company chided the Senate Committee on Energy that it just “unfortunately looked at a very thin slice of information and it is Malampaya Energy’s responsibility to work with DOE and PNOC-EC (Philippine National Oil Company-Exploration Corporation) to ensure all the facts are properly presented and the financing certainty and significant cash is known.”
Udenna further averred that “the acquisition is supported by international reputable financial institutions who saw Malampaya Energy’s capability to meet its obligations and to deliver value.”
It was reported that the lenders to Udenna’s purchase of the Shell stake will be foreign banks – primarily ING, Australia New Zealand Banking Group (ANZ), Deutsche Bank and Farallon Capital; and the financial closing and turnover will be on or before the end of this year.