WILL changes in the Malampaya consortium pose a serious threat in the country’s energy supply?
It could do so, according to Senator Sherwin Gatchalian, chairman of the Senate Energy Committee.
The senator expressed grave concern over the country’s power situation following reports that businessman Dennis Uy of Udenna Corporation may sell his shares in the Malampaya deep water gas-to-power project.
“With the expiration of Malampaya’s service contract in 2024, the depletion of the remaining reserves in the gas field by 2027, and now the possible sale of participating interests of Udenna in the country’s most important energy source —there’s so much uncertainty ahead of us insofar as our energy security is concerned. Are we looking at rotational brownouts again?” Gatchalian wondered aloud in a statement on Sunday.
Chevron Malampaya, which was renamed UC38 LLC, sold its 45-percent stake to the group of Uy. The deal was approved by the Department of Energy (DOE).
However, a similar transaction between Malampaya operator Shell Philippines Exploration B.V. (SPEX), which also holds a 45-percent stake in the Malamapaya consortium, and Udenna Corp.’s Malampaya Energy XP Pte. Ltd., has yet to be approved by the DOE.
Philippine National Oil Company-Exploration Corp. (PNOC-EC), which holds the remaining 10 percent, withheld its consent for the sale of SPEX to Malampaya Energy.
The DOE cannot proceed to evaluate the sale between SPEX and Malampaya Energy if there is no consent by parties involved. “What’s the purpose of continuing evaluation if there’s no consummation or there’s no consent by the parties?” Energy Secretary Alfonso Cusi had said.
Reuters reported last week that Uy is considering selling his Malampaya stakes purchased from Shell and Chevron.
In apparent reaction to reports, Gatchalian said, “I have proven myself right after all, over the apparent financial incapacity of Udenna’s subsidiaries that acquired the 45-percent stake of Chevron Philippines Ltd. and 45-percent stake of Shell Philippines Exploration B.V. [SPEX],” the senator said, pointing out that he had red-flagged the entry of Udenna Corporation in the operations of Malampaya due to reports of debt and cash problems as well as its technical incompetence.
Udenna stressed in a statement that it has remained open to exploring different opportunities. “With the strong post-pandemic recovery of the Philippines as evidenced by the better-than-expected GDP growth rate in the first quarter of this year, we have seen the return of investor confidence and accordingly there has been renewed interest in discussing several partnership and strategic alliance opportunities with the group,” said Udenna President Raymundo Martin Escalona.
The group’s investment philosophy, he added, has always been to maximize shareholder value through strong partnerships with strategic investors and maintain core assets that provide maximum synergies with the other companies within the Udenna Group.
“In response to these misinformed comments and hasty conjectures from some quarters, Malampaya under Udenna remains business as usual and continues to provide the Philippine government hope for energy security in the medium and long term,” said Escalona.
Alluding to Gatchalian’s earlier concern about Udenna’s capability to take over the project, Escalona asserted: “We have a highly qualified team and have expended considerable time, expense, and resources to put ourselves in the position where we can step in to arrest the decline of Malampaya.”
He accused Gatchalian of having “frustrated these attempts over the past year. As a result, today as we speak all development activity on Malampaya is on hold and the field continues to decline impacting energy security of the country. The good reelectionist senator has single handedly crippled all the planned development of Malampaya and should be held accountable to the public.”
PNOC-EC mum
PNOC-EC President Rozzano Briguez, when sought for comment, said he could not issue a statement on this matter.“I am not [at] liberty to answer that due to protocols within the consortium,” he said.
A source from Shell group said there has been no information relayed to the consortium.
Another source said the SPEX-Malampaya Energy transaction is still on since there are no announcement that the contract has been withdrawn.
“The sale is still active. What was signed last year has not been rescinded,” said an official from the Shell group.
Gatchalian stressed the importance of the technical and financial capabilities of the Malampaya consortium, particularly the operator of the gas field.
“It’s an energy security issue. My point of the matter is that we, being citizens of this country, deserve to understand whether the new owners can assure us of energy security,” Gatchalian said. “They should be able to demonstrate that they can operate this rig competently with technical expertise and in the future, if ever that area has potential, they should be able to show that they can explore and develop that area,” he said.