The Department of Energy (DOE) on Monday said it could not yet act on the Udenna group’s acquisition of Shell’s 45-percent operating stake in the Malampaya natural gas project as the transaction still needed to go through the consortium.
“At this point, any agreement between Udenna Corp. subsidiary Malampaya Energy XP Pte Ltd and Shell Philippines Exploration BV (Spex) … [related to] Petroleum Service Contract No. 38 (SC38) is a private business transaction between the parties,” the DOE said in a statement. “In other words, the DOE did not take part in the decision of Spex to sell, the bidding or negotiations that ensued, and its outcome,” it added.
The DOE was apparently reacting to a Senate resolution that Sen. Sherwin Gatchalian filed last week, which compelled the DOE to make public its plans and programs on Malampaya in light of the divestment of its operator Shell Philippines Exploration BV (Spex) and the nearing expiration of SC38 in 2024, as well as the impending depletion of the gas deposit.
Gatchalian, who chairs the Senate energy committee, also said they would conduct an inquiry into the status of the sale of the stake of Spex and the basis for the DOE’s decision—if the DOE approved the sale.
In particular, he wanted the explanation on whether Udenna was technically, financially and legally competent to be part and become operator of Malampaya.
The lawmaker raised a similar issue when Udenna acquired Chevron Malampaya last year. According to the DOE, the transfer of participating interest in SC38 is governed by the terms of the Joint Operating Agreement (JOA) entered into by the members. “Under the JOA, all parties must first consent to a sale of any or all participating interest,” the DOE said. Originally, the consortium consisted of Spex as operator, Chevron Malampaya LLC, which also held 45 percent, and state-run PNOC Exploration Corp. with 10 percent.
This means Udenna led by Davao City-based Dennis Uy, which has formed UC Malampaya Philippines Pte Ltd. to acquire Chevron Malampaya— now UC38 LLC—must allow the sale of Spex to its other subsidiar, Malampaya XP.
Meanwhile, PNOC EC’s parent firm, Philippine National Oil Co. , was a would-be partner of the Udenna in an aborted liquefied natural gas terminal joint venture with the Beijing-based CNOOC (China National Offshore Oil Corp.) group.
“However, once the transaction has been completed at the consortium level, it will still be submitted to the DOE for its review and approval in accordance with Presidential Decree No.87 otherwise known as the Oil Exploration and Development Act of 1972 (PD87),” the DOE said.
“For its part, the DOE will, accordingly and judiciously, evaluate the legal, financial, and technical aspects of the transaction, and its impact on the obligations of consortium to the Philippine government according to the terms of SC38 and PD87,” the DOE added. INQ