DOE questioned on Malampaya deals

Sen. Sherwin Gatchalian.  Senate PRIB file photo / Albert Calvelo

The Department of Energy (DOE) must justify the sale of Malampaya-related companies to the Udenna group, specifically in terms of technical, financial and legal capability to take on such an operation, according to Sen. Sherwin Gatchalian, chair of the Senate energy committee.

Gatchalian also filed a resolution to compel the DOE to make public its plans and programs for Malampaya in light of the divestment of its operator Shell Philippines Exploration BV (Spex) and the nearing expiration of Petroleum Service Contract No. 38 (SC 38) in 2024, as well as the impending depletion of the field’s gas deposit.

The lawmaker said in a statement the DOE must let the public know how it planned to ensure the future of its operations and the continuous supply of energy in the country. Malampaya gas represented one-fifth of electricity generated in the Philippines in 2020, he said. Gatchalian said his committee would conduct an inquiry into the status of the sale of the stake of Spex and the basis for the DOE’s decision if it approved the sale.

He made a similar call for the DOE to justify the approval of the sale to Udenna group of Chevron’s 45-percent nonoperating stake in Malampaya.

“It is critical for the DOE to ensure that whoever gets hold of Shell’s interest should have, not just similar experience or capacity, but more so the technical, financial and legal capability to operate the Malampaya project or to be a service contractor,” Gatchalian said.

In a statement, Udenna Corp. said its acquisition of Spex meant that Malampaya “will be 100-percent operated by Filipinos for Filipinos” while preserving the expertise of the team under Spex.

“We are tremendously proud of Malampaya Energy for acquiring one of Shell’s most successful natural gas assets in Asia, which of course includes the world-class SPEX team currently operating Malampaya,” Udenna chair Dennis A. Uy said.

Belinda Racela, head of Udenna subsidiary Malampaya Energy XP Pte. Ltd., said the current safety and reliability of Malampaya “will be delivered by the same experienced team of upstream professionals from Spex working with consistent practices.”

In November 2019 when Udenna announced the deal with Chevron, the Manuel V. Pangilinan-led group of companies through PXP Energy Corp. presented to the DOE an unsolicited proposal to integrate their SC 72 at Recto Bank—an offshore area under dispute with China—with SC 38.

This integration would have been possible if the MVP group was the one that acquired Chevron’s stake in Malampaya or if PXP partnered with the Malampaya consortium.