Encourage pioneering spirit

If there should be a probe the

Senate may want to start on the Malampaya natural gas project, the subjects should be the two multinationals that had two decades of a profit run before finally selling their interests, still at a great gain, to the Udenna group of Davao City businessman Dennis Uy.

Even before the local group can seek government help in terms of fiscal incentives for the project, some legislators have jumped in to question the technical expertise of the new operators.

Both foreign firms earned a total of more than $1 billion from the sale of their 90 percent stake in the project, with Chevron Corp. gaining $565 million while the operator, Shell Petroleum Exploration, sold out for $460 million to Malampaya Energy XP Pte. Ltd. (MEXP), another subsidiary of Udenna.

Chevron and Shell, before earning their final windfall through the sale of their shares, have generated over P350 billion in revenue stream from the Malampaya gas field project, or about P17.5 billion a year, based on documents submitted to the government.

Both companies were also afforded cost recoveries as incentives, from which they got back P300 billion over the years. This means that much of the money both invested were merely returned to the oil giants.

Royalty share of both companies ran to almost P350 billion during their period of operations.

Chevron still collected earnings from the project until 2019, while Shell will be reaping its dues until the end of this year when the deal is consummated.

The natural gas operations were beneficial to the government as well.

As 10 percent owner, the state-run Philippine National Oil Company-Exploration Corp. (PNOC-EC) was able to remit P20.8 billion in dividends to the Bureau of the Treasury last year.

Bulk of the transfers to the government came from the $11.9 billion revenues from the Malampaya venture, which exceeded the initial projections of $10 billion in revenues for the entire project duration.

The Malampaya field started producing gas for various power projects in the country in 2001; and its Service Contract (SC) with the Philippine government will lapse in 2024.

The Udenna group, however, is seeking to extend the contract as it expected the natural gas deposits to go beyond the estimate of a 2027 depletion.

Moreover, the project developed highly-skilled professionals in the upstream petroleum venture, who gained from technology transfer and training from the oil giants.

PNOC-EC’s involvement created opportunities for its personnel and prepared them to take on similar projects in the future.

The entry of the Udenna group, thus, is fraught with new risks, which the government should encourage instead of frustrate by offering the same incentives given to the multinationals, if only to help the pioneering spirit of Filipinos to pursue the landmark energy project.

In the country’s history, it would be the first time that a Filipino concern is bold enough to take on a capital-intensive energy project.

The Malampaya project is one of the reasons that Filipinos are now being regarded as an emerging power in the global business arena.

In the country’s history, it would be the first time that a Filipino concern is bold enough to take on a capitalintensive energy project.

“The project developed highly-skilled professionals in the upstream petroleum venture, who gained from technology transfer and training from the oil giants.