DOE approves Razon's acquisition of Malampaya operating stake
The Department of Energy (DOE) has approved the acquisition of the 45 percent operating equity in the Malampaya gas project by Razon-led Prime Exploration Pte. Ltd. for $170 million.
“The DOE has completed the review of the sale from Shell to Prime Infra of Shell’s 45-percent interest in the Malampaya project,” the agency announced.
The department similarly qualified that it has “approved the same after a thorough review" in accordance with Presidential Decree 87 and Department Circular No. DC2007-04-0003 for the transfer of rights and obligations in petroleum service contracts.
It was also affirmed by energy officials that the final payment to be made by buyer Prime Exploration to Shell Philippines Exploration B.V. will be $170 million.
The DOE explained that its approval is “conditioned on SPEX remaining to be a subsidiary of Prime Infra, and on the continuing validity of Prime Infra’s commitments and undertakings to the DOE in respect of SPEX’s obligations as operator of Malampaya service contract 38.”
The department further stated that state-run Philippine National Oil Company-Exploration Corporation (PNOC-EC), as minority partner in the Malampaya project, also granted its consent to the sale process.
It was in July 2022 when Prime Exploration, a subsidiary of Prime Infrastructure Capital of the Razon group, had entered into a share purchase agreement (SPA) acquiring MEXP Holding Pte. Ltd. (MEXP), which was previously owned by Davao businessman Dennis Uy.
MEXP, in turn, had cemented a deal to acquire 100-percent shares of SPEX, which served as a transition company for the continuous operation of the Malampaya gas field project.
Following DOE’s approval of the Malampaya operating stake’s divestment deal, Prime Infra Chairman Enrique Razon said “we will contribute by doing all that can be done to produce as much gas as possible to sustain production in support of the power demand in Luzon.”
Additionally, Prime Infra President and CEO Guillaume Lucci noted that the company’s energy portfolio “has always been aligned with the national government’s objective towards attaining energy independence and security, while reducing the country’s reliance on fossil fuels”
He added that “Prime Infra is well-positioned to carry on the world renowned track record of the Malampaya asset and therefore, the next urgent step for the company is to sustain and expand gas production while we promptly address the license extension for SC38.”
The company further indicated that it will assume “full ownership and control of SPEX once the transition process for a safe and seamless handover of operations from Shell is completed currently targeted for November 1, 2022.”
The original term of SC 38 will expire in February 2024, hence, the consortium will need to immediately work with government on the field’s license extension.