THE GOVERNMENT has rejected the unsolicited proposal of listed exploration company PXP Energy Corp. to take over the Malampaya gas exploration service contract, Energy officials said on Monday, explaining that the process is not allowed under existing rules.

“We advised PXP that we cannot take cognizance of their unsolicited proposal,” Department of Energy (DoE) Assistant Secretary Leonido J. Pulido III told reporters when asked for an update on the proposal during a briefing at the agency’s head office in Taguig City to observe the “National Energy Consciousness Month.”

“The reason is very basic. We have what we call the PCECP (Philippine Conventional Energy Contracting Program).”

He said the program gives proponents only two ways to get a service contract to explore the country’s oil and gas resources. PCECP is the department’s initiative to revive exploration activities in the country. The DoE identified 14 areas with potential for oil and gas finds and offered these for competitive bidding. Proponents can also nominate areas outside the list.

Mr. Pulido said what PXP did was outside the provisions allowed under PCECP. He said Malampaya is under Service Contract (SC) 38, which is already held by private entities. “So we had to deny the unsolicited proposal of PXP,” he said.

On Nov. 12, PXP said it had submitted on Nov. 11 an unsolicited proposal to the DoE for the “strategic development and utilization” of an integrated gas hub in Malampaya when SC 38 expires in 2024. The upstream oil and gas company also offered to acquire the 45% stake of Chevron Malampaya LLC in SC 38, which is located offshore northwest of Palawan.

PXP is a unit of Philex Mining Corp. which in turn is one of the Philippine units of Hong Kong-based First Pacific Company Ltd, the others being Metro Pacific Investments Corp. and PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls.

“It has been Udenna (Corp.) that has been negotiating with them (Chevron) and we were told that they have reached an agreement,” Energy Secretary Alfonso G. Cusi said on Monday during the same briefing.

PXP said its project aims to ensure energy security of the country from indigenous natural gas resources for the next 25 years and beyond, while bringing in “significant revenues” to the Philippine government. It said the use of the Malampaya facilities as the integrated gas hub would also support the development of a robust indigenous gas industry.

Under its proposal, the company envisions the Malampaya infrastructure and distribution network to support the continued development of the oil discovery’s resources as well as the economic development of Sampaguita field and other nearby projects under SC 72, which is operated by PXP Energy through Forum (GSEC 101) Ltd.

The Malampaya deepwater gas-to-power project is the first oil and gas platform designed and built in the Philippines. Shell Philippines Exploration B.V. (SPEx) operates the project on behalf of the SC 38 consortium.

SPEx also holds a 45% in SC 38, while state-led Philippine National Oil Co. Exploration Corp. has the remaining 10%.

On Monday, shares in PXP Energy rose by 0.38% to close at P10.52 each. — Victor V. Saulon

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