PNOC-EC acquires 10% in Uy’s acquisition of Malampaya stake
State-run Philippine National Oil Company-Exploration Corporation (PNOC-EC) has firmed up its deal with businessman Dennis Uy’s UC Malampaya Philippines Pte. Ltd. to acquire 10 percent of the latter’s equity acquisition in the multi-billion Malampaya gas field project.
Energy Secretary Alfonso G. Cusi said the transaction with Uy “was already finalized,” which effectively increased the shareholdings of PNOC-EC in the Malampaya project to 14.5 percent.
Uy completed in March the purchase of the 45 percent stake in Malampaya previously held by American firm Chevron, in a transaction reportedly costing US$565 million.
Out of that 45 percent, government-owned firm PNOC-EC indicated as early as December last year that it will be cornering 10-percent of the farmed-out equity – and that essentially corresponded to 4.5 percent.
Cusi, who is also the board chairman of PNOC-EC, had emphasized then that the company will be paying the equivalent 10 percent of the acquisition cost that Uy had forked out in the deal. Hence, at US$565 million, the
10 percent PNOC-EC purchase amounted to US$56.5 million.
Udenna Corporation’s deal with PNOC-EC then will effectively reduce Uy’s acquired shareholdings in Malampaya to 40.5 percent.
The energy chief said PNOC’s additional investment in the Malampaya venture had not been affected even if PNOC-EC and its parent firm Philippine National Oil Company (PNOC) had remitted ₱7.0 billion to the national treasury to support the government’s response to the coronavirus health crisis.
Prior to that business pact with Uy, PNOC-EC was already a minority stakeholder in the Malampaya project with its 10 percent interest in Service Contract (SC) 38, the operating license of the gas field.
On Uy’s entry, Shell Philippines Exploration B.V. (SPEX) remained as the operator of the gas facility, the output of which is being fed to the operating gas-fired power plants in the country at an aggregate capacity of more than 3,200 megawatts.
The service contract of the gas field will expire in 2024; and there had been no definitive statement from the Department of Energy (DOE) yet on the proposed license extension. For the field’s life cycle to be extended, the operating entity previously indicated that drilling of new wells would have to be undertaken. But with collapsing global prices, uncertainties are snowballing when it comes to the next wave of investments be it in the upstream or downstream segments of the oil and gas industry.