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DENNIS A. UY’s Udenna Corp. unveiled on Monday its plan to take over the operations of the country’s only natural gas field in the Western Philippine Sea.
This comes when Shell Philippines Exploration BV (SPEx) revealed its plan to sell its 45% stake in the Malampaya gas-to-power project under Service Contract 38 last week.
According to the Davao-based group, the remaining members of the consortium, UC Malampaya LLC and Philippine National Oil Co.-Exploration Corp. (PNOC-EC), are the “logical choice” to acquire the stake in SPEx and ensure continuity of project operations. .
“The Udenna Group firmly believes that Malampaya is a high-quality asset, strategic to the future well-being and energy security of the country and welcomes our partner PNOC Exploration Corporation to join us in taking over the field 100%. “Raymond said. T. Zorrilla, spokesman for Udenna Group, in a statement.
UC Malampaya and PNOC-EC have 45% and 10% interests in Malampaya, respectively. The project is operated by SPEx.
Mr. Zorrilla affirmed that the company and PNOC-EC are “the most suitable party to assume the interests of Shell”.
“We will exercise this right as provided in our joint venture agreement,” the official added.
In addition, the job security of the field workforce is also in the hands of the two partners, the company said.
PNOC-EC has not yet responded to a request for comment as of press time.
The next sale of SPEx’s stake in Malampaya comes as the group is dealing with the impact of the coronavirus pandemic.
In August, Pilipinas Shell Petroleum Corp. announced the permanent closure of its 110,000 barrel-per-day refinery in Tabangao, Batangas, as refining margins continue to decline with falling demand. Instead, the refinery will be converted to an import facility so that it can continue to supply the fuel needs in Luzon.
Shell “will ensure a smooth transition of the asset to a credible buyer that would be well placed to optimize the value of Malampaya,” SPEx CEO Rolando J. Paulino, Jr. said in a previous statement.
Ramon S. Ang’s San Miguel Corp. in a clarifying 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 him.
But according to Udenna, anyone outside the Malampaya consortium would “take time” to assess “complicated issues” about the project, and it could be “difficult” to assess the outcome of such issues in a “timely” manner.
The Udenna group became a partner in the Malampaya project after its UC Malampaya unit signed an agreement in October last year with Chevron Malampaya LLC to acquire a 45% stake in the latter.
“In the event that Shell does not consider its existing partners, but makes the 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 rights of preference and of consent, ”said Zorrilla.
On September 14, it was revealed that Udenna had applied to the Department of Energy (DoE) to explore two oil blocks at Recto Bank in the Western Philippine Sea. It named the areas under the Philippines Conventional Energy Procurement Program (PCECP) in March. Its applications are now undergoing legal, technical and financial evaluations before they can be approved for a service contract to Malacañang.
Currently, the Malampaya consortium is preparing a request to extend the life of the project, as it is “interested in pursuing” the discovery of more indigenous natural gas resources in the field beyond 2024, or the end of its existing contract.
The imminent departure of SPEx from the gas platform “will not affect operations in any way,” Udenna said.
The Malampaya field is capable of providing 3,200 megawatts of electricity, representing 21.1% of the country’s gross power generation in 2019. It is estimated to be completely depleted by 2027, according to the DoE.
In addition to looking for other natural gas points across the country, the government is also considering importing liquefied natural gas as an alternative. – Adam J. Ang
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