Marionettes in Congress
Unraveling a hidden agenda among senators who were made willing tools in a power-play involving the biggest names in business to derail the $1-billion transactions among Shell Philippines Exploration
Corp. (SPEX), Chevron Corp. and the Udenna Group of Davao City businessman Dennis Uy is palpable in the way the legislators pull off the job.
Reading a transcript of the budget hearing of the Department of Energy (DoE), the senators were talking as if they were the regulators determining the fate of the Malampaya natural gas project which turns 20 years in January.
Senators Sherwin Gatchalian, Risa Hontiveros and Francis Pangilinan appear to have an agreement that terminating the project is the best alternative which was a baffling conclusion if the aim is to preserve the gains of the government from it.
Since 2002, the 60 percent share of the government from the sale of natural gas provided the coffers P332 billion or something like P1.5 billion a month which flows, come hell or high water.
The senators were aware that the government would have to spend big if it chooses to take over the shares won by Udenna in a competitive bid and that the potential remains for the natural gas wells to remain productive beyond 2027.
Since 2009, operator SPEX has not invested in the exploration of new wells in the vast area covered by Service Contract 38 or the Malampaya field.
Hontiveros then asked Gatchalian if it is possible to develop new wells in the expanse of the contract area before the field dries up sometime in 2027. He advised against it. “There is no time from now to 2024 because gas and oil drilling operations are complex and there are lots of technical studies to be undertaken” was Gatchalian’s claim.
He added that such undertakings are “capital-intensive and long-term.”
Then Hontiveros issued a claim that Udenna did not spend anything in buying Chevron’s 45 percent shares worth P565 million which was paid off through bank loans, and advances from the proceeds of Chevron’s 45 percent entitlement.
Hontiveros then added the government, through the Philippine National Oil Company-Exploration Corporation (PNOC-EC) which owns 10 percent share in the Malampaya consortium, squandered a good opportunity when it waived the right of first refusal in the sale of shares.
Later on, in a forum outside the Senate, he admitted that the end game of the investigations would be “undoing” the sale of shares.
“That’s what we’re studying. We’re studying it very carefully if this can be undone but definitely there’s a basis to, if possible, undo the transaction to protect the Filipino people,” Gatchalian said.
DoE Assistant Secretary Assistant Secretary Gerardo Erguiza Jr. had explained that PNOC-EC’s mandate is to help the government achieve energy security and that buying Chevron’s shares runs counter to the state firm’s mandate.
“If acquiring the Chevron shares was so financially lucrative, then why didn’t Shell grab it at the first opportunity?” Erguiza said.
The absurd logic of the senators is that based on their claim, the government is wasting an opportunity by letting go of the deal and at the same time indicating the need to block efforts for the project to continue.
Letting the Malampaya field dry up, based on the discussions in the Senate, would result in the loss of the 60 percent share of government or an equivalent to P18 billion a year.
The government may end up losing what it already has or keep it by spending heavily as an operator of the project if the sales are rescinded following the Senators’ logic.
What the government has right now is an operator in the Udenna group willing to spend to extend the life of Malampaya and keep the revenues, the majority of which goes to the treasury, flowing.
As they say, it does not take rocket science to know what the distinguished legislators are up to.
Senators Sherwin Gatchalian, Risa Hontiveros and Francis Pangilinan appears to have an agreement that terminating the project is the best alternative which was a baffling conclusion if the aim is to preserve the gains from the government from it.
The absurd logic of the senators is that based on their claim, the government is wasting an opportunity by letting go of the deal and at the same time indicating the need to block efforts for the project to continue.