The Integrated Bar of the Philippines (IBP) on Wednesday, Nov. 24, expressed opposition to the takeover of the Malampaya Deepwater Gas-to-Power Project by two subsidiaries of Udenna Corp., a diversified company controlled by businessman Dennis Uy.
In a statement, the IBO said: “A buyer who is not technically and financially capable of operating Malampaya may tap companies from foreign countries having adverse interest in the West Philippine Sea dispute.”
“This will place out strategic energy resources and infrastructure in the hands of hostile foreign interest,” the IBP, through its President Burt M. Estrada, warned.
Uy is a Davao City-based businessman and is a known ally of President Duterte. Reports stated that Uy’s businesses have connections with China which has made territorial claims over the West Philippine Sea.
As the Petroleum Supply Contract (SC) 38 is set to expire in 2024, the IBP noted that the consortium operating the Malampaya facility has decided to make divestments that allowed Chevron Malampaya LLC to assign 45 percent of its stake at Malapaya to a subsidiary of Udenna Corp. and Shell Philippines Exploration BV (SPEX) divestment of 45 percent to another Udenna subsidiary.
“The assignment of interests, which will ultimately enable Udenna to take over the Malampaya facility is allegedly detrimental to national security and interest,” it said.
It supported the ongoing Senate Committee on Energy’s investigation in aid of legislation “on the interest divestments to the Udenna subsidiaries.”
“The ongoing Senate investigation will determine if the DOE (Department of Energy) was transparent in determining the financial and technical qualifications of the Udenna companies to acquire the 90% interest in SC 38,” it said.
While the Senate investigation is ongoing, the IBP urged the DOE “to thoroughly review, study, and consider the extension of SC 38 in favor of the original Malampaya consortium -- SPEX, Chevron, and PNOC EC (state-owned Philippine National Oil Corporation-Exploration Corporation).”
“The extension will incentivize the original consortium to continue operating SC 38 with their proven technical and financial track record in petroleum operation and development in contrast to a buyer with no proven experience in operating a highly-technical and capital-intensive operation,” the IBP pointed out.
Should Chevron and SPEX proceed with the divestment of their interests in Malapaya, the IBP said the PNOC should “exercise its right to match any offer laid before Chevron and SPEX under the JOA (Joint Operating Agreement).”
“The IBP believes that PNOC being a state-owned petroleum company has the mandate and wherewithal to raise funds for acquiring the controlling interests in Malampaya,” it stated.
“A PNOC takeover of SC 38 will be financially advantageous to the Philippine government since Malampaya is a producing field with an existing infrastructure for other petroleum discoveries,” it added.
Since a criminal complaint has been filed last October before the Office of the Ombudsman (OMB) concerning Udenna’s takeover, the IBP also called on the OMB “to expeditiously resolve the complaint against the officials of the DOE, Udenna, Chevron, SPEX, and PNOC in light of the fact that this matter is of utmost economic urgency since the Malampaya field is nearing its depletion and DOE appears to have no viable alternative to replace a major source of power for Luzon.”
“The DOE must exercise transparency in evaluating transactions in relation to critical energy resource and ensure that developers are financially and technically competent,” the IBP stated.
“In this way, the government can forge a sustainable balance in creating a stable investment climate and establishing good governance practice in the management of the country’s energy resources,” it added.