DENNIS A. UY’s Udenna Corp. on Monday revealed its plan to fully take over the operations of the country’s sole natural gas field in the West Philippines Sea.
This comes as Shell Philippines Exploration B.V. (SPEx) disclosed its plan to sell its 45% interest in the Malampaya gas-to-power project under Service Contract 38 last week.
According to the Davao-based group, the remaining consortium members — UC Malampaya LLC and the Philippine National Oil Co.-Exploration Corp. (PNOC-EC) — are the “logical choice” to acquire the SPEx stake to ensure the project’s continued operations.
“The Udenna Group firmly believes that Malampaya is a high-quality asset, strategic to the future welfare and energy security of the country and welcome our partner PNOC Exploration Corporation to join us in taking over the field on a 100% basis,” said Raymond T. Zorrilla, spokesperson of Udenna Group, in a statement.
UC Malampaya and PNOC-EC hold 45% and 10% interest in Malampaya, respectively. The project is operated by SPEx.
Mr. Zorrilla claimed that the company and PNOC-EC are the “most suitable party to assume Shell’s interest.”
“We will exercise this right as provided in our joint venture agreement,” the official added.
Moreover, the job security of the field’s workforce is also in the hands of the two partners, the company claimed.
PNOC-EC has yet to respond to a request for comment as of press time.
The upcoming sale of SPEx’s Malampaya interest comes as the group is grappling with the impact of the coronavirus pandemic.
In August, Pilipinas Shell Petroleum Corp. announced the permanent closure of its 110,000-barrel-per-day Tabangao, Batangas refinery as refining margins continue to fall with the slump in demand. The refinery will instead be converted into an import facility so it can continue to supply fuel needs in Luzon.
Shell will “ensure a smooth transition of the asset to a credible buyer who would be well placed to optimize the value from Malampaya,” SPEx General Manager Rolando J. Paulino, Jr. said in an earlier statement.
Ramon S. Ang’s San Miguel Corp. in a clarificatory disclosure last week said it was considering acquiring SPEx’s stake in the project. A Philippine Star report also said that Manuel V. Pangilinan’s group is also interested in it.
But according to Udenna, it would “take time” for anyone outside the Malampaya consortium to evaluate “complicated issues” in the project, and it might be “difficult” for them to assess the outcome of said matters in a “timely manner.”
The Udenna group became a partner in the Malampaya project after its unit UC Malampaya signed an agreement in October last year with Chevron Malampaya LLC to acquire the latter’s 45% stake.
“Should Shell not consider their existing partners but put forth a decision to sell its stake to another third party, Udenna will rely on its rights as stipulated in the agreement and as a member of the consortium, such as our pre-emptive and consent rights,” Mr. Zorrilla said.
On Sept. 14, Udenna was revealed to have applied with the Department of Energy (DoE) for the exploration of two petroleum blocks in Recto Bank in the West Philippines Sea. It nominated the areas under the Philippine Conventional Energy Contracting Program (PCECP) in March. Its applications are now being subjected to legal, technical, and financial evaluations before they can be endorsed for a service contract to Malacañang.
Presently, the Malampaya consortium is preparing an application to extend the life of the project as it is “keen to pursue” the discovery of more indigenous natural gas resources in the field beyond 2024, or the end of its existing contract.
SPEx’s imminent exit from the gas platform “will in no way impact operations,” Udenna said.
The Malampaya field is able to provide 3,200 megawatts of electricity, making up 21.1% of the country’s gross power generation in 2019. It is estimated to be completely depleted by 2027, according to the DoE.
Besides looking for other natural gas spots around the country, the government is also looking into liquefied natural gas imports as an alternative. — Adam J. Ang