Sale of Chevron Malampaya stake to UC gets DOE nod

The Department of energy (DOE) has approved the sale and transfer of Chevron Malampaya LLC’S entire 45-percent stake in the Malampaya gas consortium to UC Malampaya Pte. Ltd. owned by Davao businessman Dennis Uy.

The sale, which was finalized in March last year, is worth $565 million, according to DOE officials who made it public during a senate hearing held in November last year. Back then, lawmakers were alarmed by UC’S sizable stake in the gas field, which may have implications on security of the country’s power supply.

Energy Assistant Secretary Leonido J. Pulido III, who represented the agency in the Senate hearings that tackled the gas industry, said the Chevron-udenna sale would be considered final and concluded once the DOE approves it.

On Wednesday, UC expressed its appreciation of the DOE’S approval of the transfer of rights and obligations of Chevron Malampaya LLC, now UC38 LLC, to UC Malampaya under Service Contract No.38.

SC 38 was awarded to Shell Philippines Exploration (45 percent), Chevron Corp. (45 percent) and PNOC Exploration Corp. (10 percent). The service contract will expire in 2024 unless the DOE extends it. With only 3 years left, the government is faced with a daunting task to discover another petroleum field the size of the Malampaya gas field.

“We reiterate our company’s commitment to support the country’s energy agenda on security, self-reliance and use of cleaner energy sources, and the DOE’S approval of the transfer of rights is a welcome progress to reach this end,” said Dennis A. Uy, Chairman and CEO of Udenna Corp.

The Malampaya consortium safeguards the nation’s energy security by producing gas, which generates a fifth of the Philippines’s rapidly growing electricity needs. As a consortium partner, UC38 works closely with SPEX, the current operator, and the Philippine National Oil Company-exploration Corp. (PNOC-EC).

UC Malampaya now officially holds the 45 percent of the Malampaya gas project.

“We are committed to the safe, reliable and sustainable development of the gas-to-power industry in the Philippines through Malampaya. UC38 continues to be led by the highly qualified team who were previously with Chevron and provide us with upstream technical, operational, and commercial expertise based on global industry best practices,” said Uy.

“We are proud to be part of the successful Malampaya public-private partnership, providing indigenous, affordable and clean energy to secure the energy future of the Philippines. We will continue to explore the best avenue to provide a continuous and sustainable supply to meet the growing demand for cleaner power generation.”

UC Malampaya also expressed interest to acquire the 45-percent operating interest of Royal Dutch Shell’s domestic exploration unit in Malampaya, alongside the PNOC-EC.

If and when Udenna Malampaya once again secures an additional 45-percent, lawmakers are concerned about how the Uy-led firm would be able to operate the multibillion dollar deep water gas-topower project considering its lack of technical capability and experience in the oil and gas industry. Udenna Malampaya’s corporate papers showed that the company was established only last year.

“The goal is to assure the country’s energy security. How do you do that? One, make sure the operator is technically qualified. Two, it must also be qualified to look for future gas resources because the Malampaya gas field is running low. In short, it should be qualified to operate the existing gas platform and qualified to explore and develop future gas resources. These are the two most important goals,” said Senate Energy Committee Chairman Sherwin Gatchalian.