ENERGY Secretary Raphael Lotilla said Tuesday he would defer to the Philippine National Oil Company-Exploration Corp. (PNOC-EC) the unresolved issues involving the sale of Malampaya stake between Shell Philippines Exploration B. V. (SPEX) and a subsidiary of Davao businessman Dennis Uy’s Udenna Corporation (UC).
Lotilla, as the Department of Energy (DOE) Secretary, is also the chairman of PNOC-EC. In order to be fair and just, Lotilla said it would be best if the DOE would not meddle in it.
“As the DOE secretary, I would be heading the agency that would also be reviewing this from the standpoint of the DOE. So, while I am the chairman of PNOC-EC, it would not be good for me to be participating in the deliberations of PNOC-EC on this and then reviewing myself later on. So, I would have to get PNOC-EC to address these issues,” said Lotilla at a virtual news briefing.
He said PNOC-EC President and Chief Executive Officer Franz Josef George Alvarez, along with the board, would lead the review.
“President Alvarez is heading this particular effort right now and they would have to address these issues with the PNOC-EC board soon because there are certain timelines that have to be met,” Lotilla said, noting that the members of the board are competent and professional.
The members of the Malampaya consortium are led by its operator SPEX (45 percent), UC38LLC (45 percent), and PNOC-EC (10 percent).
UC38LLC, another subsidiary of UC, acquired the shares of Chevron Malampaya LLC in October 2019, which was approved by the DOE.
Later on, another UC subsidiary—Malampaya Energy XP Holding Pte. Ltd. (MEXP)—acquired the shares of SPEX. However, PNOC-EC did not give its consent to the deal. Had the SPEX-MEXP deal pushed through, the group of Uy would have taken control of the precious gas field, which is already fast depleting.
Last month, a subsidiary of Razon-led Prime Infrastructure Capital Inc. (Prime Infra) moved to acquire MEXP from UC.
Prime Exploration Pte. Ltd., a subsidiary of Prime Infra, signed a share purchase agreement acquiring MEXP.
The move effectively makes it the new operator of the Malampaya deep-water gas-to-power project.
The change in control of SPEX from Shell to Prime Infra is subject to the consent of PNOC-EC and the DOE. If and when the consents are given and the transition process for a safe and seamless handover of operations is completed, Prime Infra will assume full ownership and control of SPEX.
In a statement last month, Prime Infra, Shell and Udenna said they are currently working together to achieve a smooth transition of SPEX to Prime Infra.
The Malampaya project is one of the country’s most important power assets, as it produces natural gas to power plants in Batangas City that account for around 20 percent of the Philippines’s total electricity requirements. It began operations in 2001, with the consortium’s license for the project set to expire in 2024.
Operating since 2001, the Malampaya project is the only local producer of indigenous natural gas. It supplies fuel to around 40 percent of gas-fired plants in Luzon, powering around 3,457 megawatts (MW) of power plants that provide power supply to the Luzon grid.
“Prime Infra’s acquisition of MEXP reflects our shared commitment with the national government to help maintain energy security and independence as we transition to a renewable energy-fueled Philippine economy,” said Prime Infra Chairman Enrique K. Razon, Jr.
Prime Infra, he added, intends to accelerate investments in the Malampaya gas field to improve the output of existing wells and, if possible, develop new wells in the area once the license extension is secured from the government.
“We look forward to this opportunity to partner with Prime Infrastructure and PNOC EC, as we explore more ways to fulfill our common vision to make Malampaya continue to operate safely and reliably to strongly support our country’s need for indigenous and sustainable energy for many years to come,” said Uy in the same statement.
