Senator Sherwin Gatchalian has raised alarm over the possibility that the government is entering into a midnight deal to extend the service contract of the Malampaya project with the gas field operator Shell Philippines Exploration B.V. (SPEX) by finalizing the transfer of its participating interest to Dennis Uy’s Udenna Corp.’s subsidiary Malampaya Energy XP Pte. Ltd.
Gatchalian questioned on Thursday, September 30, the speed at which the government negotiated with the latter while the Department of Energy (DOE) has never given Shell the assurance if they would be extended or not since 2016.
“Hindi talaga maiaalis sa isip na baka magkaroon ng midnight deal dahil 2016 pa lang, gusto na itong i-renew ng Shell (I really cannot erase it from my mind that there could be a midnight deal because since 2016, Shell wanted to renew its contract),” said Gatchalian, who chairs the Senate Committee on Energy.
“I know that for a fact. I can attest. Ngayong pumasok sa eksena si Udenna, biglang bumilis yung negotiations (When Udenna came into the picture, suddenly the negotiations picked up pace),” he added.
DOE officials, during a recent Senate hearing, confirmed to the Senate Energy Committee that serious negotiations started in the middle of this year along with the creation of a negotiating team.
However, senators raised concerns in the government sealing the sale of SPEX’s stake in the gas field project especially with Malampaya Energy already negotiating with the government. One of the conditions being discussed in the negotiations is the possible 70-30 royalty sharing in favor of the government.
But senators noted that the internal evaluation by DOE Financial Services showed that the agency did not evaluate the financial capability of UC Malampaya.
Gatchalian said it is “quite premature and unethical” for Malampaya Energy to negotiate with the government.
“It’s too presumptuous in fact. We already laid down that DC 2007 should be applied to the transfer,” he said.
The senator is referring to Department Circular No. 2007-04-003 which sets the guidelines and procedures for the transfer of rights and obligations in petroleum service contracts as underpinned by Presidential Decree No. 87 or the Philippine Oil and Gas Law.
Gatchalian warned DOE he will hold the agency accountable in this Chevron-Udenna deal.
“What you need to address first is your insufficient foundation for legal basis and I will not tolerate that in the evaluation of Shell. I will take every recourse possible to hold you to account because operations na ang pinag-uusapan dito (we are talking about operations here),” he said.
“Then we look at the Chevron deal. I will likewise hold you to account in this Chevron-Udenna deal,” the senator said.
“As Filipinos, we want an operator who is qualified, experienced, and who can assure us of continuous flow of gas to our power plants. Also as a consumer, I want my public servants in the DOE to exercise prudence, diligence and integrity,” Gatchalian emphasized.