As issues are raised that businessman Dennis Uy cannot legally sell the 45 percent operating stake in the Malampaya project because its deal with Shell Philippines Exploration B.V. (SPEX) was never consummated,
Energy Secretary Raphael Perpetuo M. Lotilla is taking a hands-off position and will let state-run Philippine National Oil Company-Exploration Corporation (PNOC-EC) sort out these particular concerns thrown on that merger and acquisition (M&A) transaction.
“I would have to get PNOC-EC to address these issues and President (Franz) Alvarez is heading this particular effort right now,” the energy chief stressed.
Alvarez, who was a former Congressman from Palawan which is the host community of the Malampaya project, has been recently appointed by President Ferdinand Marcos Jr. as President and CEO of state-run PNOC, replacing Retired General Rozzano Briguez.
To recall, PNOC-EC withheld in December last year its consent on the sale of the 45-percent shareholdings of SPEX in Malampaya to Uy’s Malampaya Energy XP (MEXP), a company incorporated in Singapore and a subsidiary of his Udenna Corporation.
PNOC-EC has 10 percent minority stake in the Malampaya project and it is a requirement under their Joint Operating Agreement (JOA) under Service Contract 38 that the consent of all project-shareholders shall be secured before partners in the consortium can divest their interest in the gas field venture. Apart from PNOC-EC and SPEX, the other shareholder is Dennis Uy’s UC38 (another subsidiary of Udenna) because it previously purchased the other 45 percent stake owned by Chevron in the gas field project.
Because PNOC-EC withheld its consent, the targeted purchase of Uy of the SPEX shares never reached transaction closing as originally targeted during the Duterte administration. Hence, the Davao businessman never legally acquired the operating stake in Malampaya. With that, issues have been raised questioning the supposed sale of the Malampaya shares by Uy to Prime Exploration Pte. Ltd, a subsidiary of Prime Infrastructure Capital Inc. (Prime Infra) which is owned by billionaire Enrique Razon.
Lotilla conveyed that his directive is “they would have to address these issues with the PNOC-EC Board soon because there are certain timelines that have to be met.”
Lotilla further instructed the PNOC-EC Board to “have a complement of professional and competent advisors or consultants that will help them evaluate what is before them.”
He further stated “I have great confidence in our career people in PNOC-EC that together with the consultants, they would be able to assist the Board and President Alvarez in making sure that the necessary due diligence is carried out; and then it would go to the Department of Energy.”
Lotilla said he is currently taking a hands-off approach on the ongoing negotiations between and among relevant parties, which include Uy’s MEXP, the Prime Exploration firm of Razon, and SPEX, the owner-seller of the operating interest in the country’s depleting gas field.
The energy chief qualified that it is a prudent step for him not to interfere at this point, because once an agreement will be reached by the parties on the sale of the SPEX shares, the next level of evaluation and approval will have to be done by the DOE.
“Now, as Department of Energy Secretary, I would be heading the agency that will also be reviewing this from the standpoint of the DOE. So, while I am the chairman of PNOC-EC, it would not be good for me to be participating in the deliberations of PNOC-EC on this; and then reviewing myself later on,” he asserted.
The energy chief also digressed from giving definitive statements on media queries as to whether or not the DOE will approve the license extension bid of whichever entity will eventually take over the Malampaya field.
“Let’s take it one step at a time. We want to make sure that all the prerequisites toward that will be addressed...should there be an application for extension that will come down the line, because first we will have to deal with the issues about the sale of the Shell operatorship to another entity; and then take the next step after that,” he expounded.