DOE asked to rescind approval of Malampaya stake sale to Udenna

Published November 25, 2021, 3:59 PM

by Myrna M. Velasco

The Integrated Bar of the Philippines (IBP) has asked the Department of Energy (DOE) to rescind the approval it granted to Udenna Corporation for the acquisition of the 45 percent shareholdings of Chevron Corporation in the multi-billion Malampaya deep water gas-to-power project.

In a statement, IBP primarily sought that kind of tough action from the energy department while the Senate continues to probe the alleged misdeeds committed in the purchase of Malampaya shares by Udenna, which is owned by Davao businessman Dennis Uy. IBP is the organization of lawyers in the Philippines,

“While the Senate investigation is ongoing, the IBP calls on the DOE to rescind its approval of Chevron’s transfer of its 45-percent interest in Malampaya to Udenna’s subsidiary, UC Malampaya; and hold in abeyance, its approval of SPEX’s transfer of its 45-percent to another Udennna subsidiary, Malampaya Energy XP,” the IBP said.

The sale of the 45 percent majority and operating shareholdings of Shell Philippines Exploration B. V. (SPEX) in the Malampaya venture is due for approval by the DOE on or before the end of this year.

The divestment of Chevron shares was first consummated in March 2020, while the DOE approval came around April this year.

Following that development, several ‘mysteries’ were being unearthed in series of Senate investigations that scrutinized all the focal points of the transaction between Udenna and Chevron.

The IBP thus noted “in light of the strategic importance of the Malampaya energy resource to national security and economic interest, (it) supports the ongoing Senate Committee on Energy’s investigation in aid of legislation on the interest divestments to the Udenna subsidiaries.”

It added that “the ongoing Senate investigation will determine if the DOE was transparent in determining the financial and technical qualifications of the Udenna companies to acquire the 90-percent interest in SC (Service Contract) 38,” which is the operating license for the Malampaya project.

In supporting calls for the revocation of the DOE approval on the first divestment transaction with Chevron, the IBP reiterated the allegations thrown against Udenna. These include questions on Udenna’s financial and technical incapacity to operate a technically complex gas field asset like Malampaya. It was also alleged that the DOE and state-run Philippine National Oil Company (PNOC) “grossly and inexcusably neglected government’s right to match Udenna’s offer to buy out Chevron’s 45-percent interest.”

The lawyers’ group further cited allegations that “officials of the DOE and PNOC criminally conspired with the private respondents to give unwarranted benefits to Udenna and its subsidiary causing undue injury to the government arising from the questioned sale transaction.”

And instead of granting the targeted Malampaya license extension to Udenna, the IBP emphasized that the original consortium-members should be the one allowed “to conduct further exploration on SC 38 in light of the forthcoming depletion of the Malampaya natural gas field.”

The IBP noted “the extension will incentivize the original consortium to continue operating SC 38 with their proven technical and financial track record in petroleum exploration and development in contrast to a buyer with no proven experience in operating a highly-technical and capital-intensive operation.”

The group further emphasized though that “in the event that Chevron and SPEX proceed with their plans to divest their respective interests in Malampaya… (it) calls for PNOC to exercise its right to match any offer laid before Chevron and SPEX under the joint operating agreement.”