Hontiveros seeks probe into 'propriety' of Udenna takeover of PH fossil energy assets

Published November 19, 2021, 10:46 AM

by Dhel Nazario

Senator Risa Hontiveros is calling for a Senate inquiry into the “propriety” of allowing a single private entity to control almost all of the nation’s strategic fossil energy assets in the West Philippine Sea.

Senator Risa Hontiveros (Senate PRIB)

Hontiveros said on Friday, Nov. 18 that she has filed proposed Senate Resolution No. 950 urging the Senate Blue Ribbon Committee to look into the “propriety” of Udenna’s takeover of the said assets in the WPS, as well as its impact on the nation’s security and economic interests.

Hontiveros believes it is “very puzzling and alarming” that a single private entity, Udenna Corporation, was allowed to acquire almost all of the Philippines’ strategic fossil energy assets in the West Philippine Sea (WPS).

Hontiveros said that the company, led by a campaign donor of President Duterte, seemed to have secured a “mind-blowing” number of favorable government deals in recent years. Udenna’s chairman is Dennis Uy, a campaign donor and friend of President Duterte. “By allowing Udenna to control both the Malampaya Project and its gas pipeline, as well as the fossil energy resources in the Recto Bank, the Department of Energy (DOE) and the Philippine National Oil Company (PNOC) not only deprived the Philippine government of a substantial source of revenue, but also allowed private – and possibly foreign – interests an undue advantage over the nation through the possession of its vital strategic assets,” Hontiveros said.

Hontiveros noted that in 2019, Udenna acquired a 45 percent share in the Malampaya Deep Water Gas-to-Power Project from Chevron Malampaya LLC for USD 545 million. It later entered into an agreement with Shell Philippines Exploration B.V. to acquire another 45 percent of the project for USD 380 million.

She also mentioned that the DOE also recommended the award to Udenna of two service contracts covering areas in the Recto Bank – an underwater formation said to contain most of the oil and natural gas in the West Philippine Sea. The senator pointed out that Udenna paid for the Malampaya shares not with existing assets but with loans from various banks. In return, Udenna is set to earn a projected income of nearly USD 1.2 billion from its Malampaya shares.

Hontiveros flagged that state-owned PNOC may have allowed Udenna’s “buying spree” by not exercising its right of first refusal – which gave PNOC the right to have the first opportunity to purchase Malampaya shares owned by Shell and Chevron.

“If the government had matched Udenna’s offer, it would have been guaranteed a net income of around USD 275 million for around four years, until the existing wells are depleted by 2024. By failing to exercise its right of first refusal, the government was deprived of hundreds of millions of dollars which we could have used to meet the people’s needs,” Hontiveros said.

“The Malampaya project is very important to the daily lives of Filipinos. We should make sure that no law was broken, and that the public’s interests are not prejudiced in transactions related to these vital national assets,” she added.

 
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