SPEX: NO MALAMPAYA SALE UNLESS WE FIND MOST QUALIFIED BUYER
SHELL Philippines Exploration B.V. (SPEX), the operator of the Malampaya gas field in offshore Palawan, said Thursday that, while it has announced a decision to sell its entire 45-percent stake in the vital energy project, it would do so only to a “suitable, financially and technically competent” firm.
While the upstream development arm of the Royal Shell Group has yet to name interested firms, SPEX said it would not sell until it finds the most qualified buyer.
“Our priority is to make sure we have safe and reliable operations. We are committed to continue with the operations until a suitable, financially and technically competent buyer is found,” the company said in an e-mail reply to the Businessmirror.
SPEX announced late Monday that the decision to divest its Malampaya stake is part of an ongoing portfolio rationalization to simplify and increase the resilience of its business.
The company has informed the Department of Energy (DOE) about this. “Shell informed us that they are looking for a buyer in their Malampaya share. What I know is they are realigning their business strategy and have to sell some assets,” said Energy Secretary Alfonso G. Cusi in a text message when sought for comment.
The DOE had assured the public that gas supply would not be affected by the decision of SPEX to sell its stake. “In case it’s sold, it won’t affect our gas supply for the power plants drawing from it,” said Cusi.
The Malampaya gas field fuels five power plants with a combined capacity of 3,211 megawatts (MW). It also supplies roughly 40 percent of Luzon’s power requirements.
SPEX, which has poured an investment of $4.5 billion in the gas field, said a team is handling the “marketing of our shares in Malampaya.”
“We have not yet started to market the Malampaya shares. Before we do that, we need to inform the relevant stakeholders like the DOE,” said SPEX managing director Don Paulino in a television interview.
Udenna, PNOC-EC
THE DOE, through the Philippine National Oil Co. Exploration Corp. (PNOC-EC), holds a 10-percent interest in the gas field project. The remaining 45 percent is held by Udenna Corp. (UC).
UC, which is led by Davao businessman Dennis Uy, earlier bought the Malampaya stake from Chevron Malampaya Llc.
Cusi said UC and PNOC-EC may exercise their right of first refusal. “But will they exercise it? That I cannot answer,” he said.
If and when the sale is successful, Shell Philippines said it would continue to have significant presence through its 1,100 retail sites, Tabangao and Northern Mindanao Import Terminals and 4,000-strong Shell Business Operations (SBO).
“It’s a big no,” said Pilipinas Shell Petroleum Corp. spokesperson Cesar Abarcia when asked if Shell Philippines will eventually exit the country. “We still have the new import facility, retail stations, commercial business, lubricants, aviation, bitumen, SBO, etc…”
Shell Philippines will continue to pursue opportunities where it can leverage its global expertise in line with its strategy. “There are still many opportunities.… We all know that Covid has affected our economy. We lost $18 billion the past six months,” he said in a mix of English and Filipino. The $18-billion loss pertains to the mother company Royal Dutch Shell, not just the Philippine company.
“We are now preparing to build up savings anew to fund our future projects,” Paulino said.
SPEX, UC and PNOC-EC form a consortium that operates Service Contract 38. They have a pending application before the DOE to extend the contract. “There’s a pending application by the consortium for renewal and we are evaluating it regardless Shell’s share is sold or not. What we want to make sure is gas supply will not be disrupted or affect gencos’ operation,” added Cusi in a text message.
SPEX did not say if it will withdraw its application to extend SC 38 (Malampaya), saying its priority is “to make sure that we can continue to supply the energy supply to the country safely and reliably. This includes progressing our application [together with the other JV] and discussion with the DOE.”
The consortium has so far remitted a total of $11.7 billion to the national government. The amount, said SPEX, represents the 60-percent government share from the start of the Malampaya operations to the present.