Malampaya Energy XP Holdings (MEXP), a subsidiary company of Udenna Corporation of businessman Dennis Uy, does not hold any firm interest yet on the 45-percent operating stake in the country’s commercial gas field because its acquisition deal with Shell Philippines Exploration B.V. (SPEX) had not been consummated, according to Senate Committee on Energy Vice Chairman Sherwin T. Gatchalian.
On that precept, the lawmaker said the government needs to exercise caution in approving that divestment transaction covering Shell’s operating stake in Malampaya, which currently is the subject of negotiation between MEXP and Razon-led Prime Exploration Pte. Ltd.
Gatchalian noted that state-run Philippine National Oil Company-Exploration Corporation (PNOC-EC), a minority shareholder in the Malampaya gas field venture, withheld its consent to the sale of the Shell shares to MEXP, hence, there was no sale closing that happened.
“Since PNOC-EC did not give its approval, Malampaya Energy does not hold the controlling interest of SPEX. So, Prime Infra cannot say that it acquired a major stake in Malampaya until Malampaya Energy gets government approval,” the solon stressed.
He, nevertheless, noted that since the details of discussion between Prime Exploration and MEXP are being kept under wraps, the government, primarily the Department of Energy (DOE), has to exercise prudence on its evaluation as well as on any decision that it shall render to that merger and acquisition (M&A) deal.
“We don’t know the terms of the deal. So, we have to make sure that the transaction is compliant with law and regulation as Malampaya is the country’s single most important energy resource,” the solon said.
So far, Prime Exploration already sounded off that its transaction with Uy will have to go through the warranted approvals of PNOC-EC, as well as that of the energy department.
Gatchalian further reminded all relevant parties that “the agreement requires prior approval from the DOE under Presidential Decree (PD) No. 87 and Department Circular (DC) 2007-04-0003.”
The lawmaker stated that the DOE Circular, in particular, “prescribes the guidelines and procedures to ensure that the assignee or transferee possesses the legal qualification, financial resources, and technical expertise and experience to undertake its obligations and commitment under the petroleum service contract.”
Further, PD 87 or the country’s Oil and Gas Law, underpinned the award of Service Contract 38 (SC 38), which serves as the license for the development and operation of the Malampaya gas field.
That service contract will expire in February 2024 and there are no definitive pronouncements yet from the DOE that a license extension will be granted.