THE DEPARTMENT of Energy (DOE) needs to reveal its plans to maintain energy continuity after the contract of Malampaya gas field operator Shell Philippines Exploration B.V. (SPEx) ends in 2024, a legislator said.
Senator Sherwin T. Gatchalian said in a statement that he filed Senate Resolution No. 724 on May 18 directing the Senate Committee on Energy to conduct an inquiry on the DoE’s plans with the approach of the end of the Shell service contract.
“Given the significant role that the Malampaya project plays in the Philippines’ energy security, it is imperative that the DoE apprise the Filipino public on Malampaya’s operations — the remaining natural gas reserves and the government’s plans for continuous energy supply, likewise on the pending request for the extension of Service Contract (SC) No. 38,” Mr. Gatchalian said.
“The inquiry will also look into the status of the sale of the stake of SPEx and the basis for the DoE’s decision if it approves the sale,” he added.
On Thursday, Shell Petroleum N.V. announced that it signed an agreement with Malampaya Energy XP Pte. Ltd., for the sale of its 100% stake in SPEx.
Malampaya Energy XP Pte. Ltd. is a subsidiary of Udenna Corp. led by Dennis A. Uy.
SPEx holds a 45% interest in SC 38, which covers the Malampaya gas field. Other companies that have an interest in the contract are UC 38 LLC – another Udenna Corp. subsidiary – with 45%, and the Philippine National Oil Co. Exploration Corp., with 10%.
According to Shell, the consideration of the sale is $380 million with additional payments of up to $80 million between 2022 to 2024 contingent on asset performance and commodity prices.
The transaction is targeted for completion by the end of the year, subject to agreement by the parties and regulatory approval.
Mr. Gatchalian said the DoE should also review and evaluate the transfer of interests of the consortium members to comply with Presidential Decree No. 87.
“It is critical for the DoE to ensure that whoever gets hold of Shell’s interest should have, not just similar experience or capacity, but more so the technical, financial and legal capability to operate the Malampaya project or to be a service contractor,” Mr. Gatchalian said.
Mr. Gatchalian said the Malampaya project is the country’s most significant oil and gas development, accounting for 19.16% of the Philippines’ electricity in 2020. – Revin Mikhael D. Ochave
“It has also provided a crucial source of income for the government with a total net national government share amounting to P261.68 billion since it began commercial operations in 2002 until 2019,” Mr. Gatchalian said.
BusinessWorld sought the comment of DOE on the matter but has not responded as of deadline time.