Shell gives up Malampaya

Cusi assured that the planned sale will not affect the operations of Malampaya and that supply will remain intact

The Department of Energy (DoE) on Wednesday confirmed that the Philippine upstream subsidiary of Royal Dutch Shell is selling its 45-percent stake in the Malampaya deep water gas-to-power facility.

In an interview yesterday, Energy Chief Alfonso G. Cusi told the Daily Tribune that the agency was notified of the plan last Tuesday.

Cusi said the sale is part of Shell’s plan to rationalize its assets.

He assured that the planned sale will not affect the operations of Malampaya and that supply will remain intact.

Meanwhile, Shell Philippines Exploration B.V. (SPEX) Managing Director and General Manager Don Paulino said the plan to divest its interest in Malampaya was part of their portfolio rationalization.

“Shell would ensure a smooth transition of the asset to a credible buyer who would be well placed to optimize the value of Malampaya,” Paulino said.

Shell’s former partner, American energy giant Chevron Corporation, has also sold its 45-percent interest in the gas field to Udenna Corporation led by Davao-based businessman Dennis Uy with a DoE-floated price of $565 million.

Despite the buyout, Shell remained as the operator of Malampaya.

Pilipinas Shell communications manager Cesar Abaricia previously told reporters that the transfer of ownership will not have any material impact on the operations of the gas-to-power facility since the expertise is still with Shell.

With Shell selling its stake, the Malampaya power plant may be operated by another firm.

The Malampaya gas-to-power facility fuels three gas-fired power plants with a total generating capacity of 2,700 megawatts (MW). It provides up to 30 percent of the power generation needs of Luzon.

Connected to onshore gas plants in Batangas, the Malampaya offshore facility in Northern Palawan was inaugurated in 2001.

Estimates showed that Malampaya gas field reserves are sufficient until 2022 to 2024.

However, the DoE recently pointed out that the exhaustion of the Malampaya gas field would lead to massive brownouts in Luzon.

To address energy insecurity, the Philippine Petroleum Association of the Upstream (Oil and Gas) Industry (PAP) was mandated to work closely with the government agencies to revitalize oil and gas explorations.

The DoE noted that the Philippines is still underexplored that even in Palawan — where oil and gas fields are also located — new prospects have already been delineated for drilling and exploration.