Shell, Udenna must work together to renew Malampaya contract

Business rivals in the petroleum industry Pilipinas Shell and Dennis Uy’s Udenna Corp. will now have to work together in the Malampaya deep water gas to power project in renewing its contract with the government, industry sources told The STAR.

“The Malampaya consortium has the option to apply for an extension of its contract, which expires in 2024. If Udenna buys Chevron, they will become part of the consortium which will apply for the extension,” a source said.

Another source said that Shell and Udenna would have no choice but to work together even as they were rivals in the oil industry business. Pilipinas Shell is among the country’s Big Three oil companies in the Philippines, while Udenna’s Phoenix Petroleum is the leading independent oil firm in the country.

Both oil companies are listed in the stock exchange.

Uy’s Udenna announced last week that it has acquired the 45 percent stake of Chevron Philippines in the $4.5 billion Malampaya project, confirming a report by The STAR.

“Udenna Corp. is pleased to announce that on Oct. 25, 2019, UC Malampaya Philippines Pte Ltd, a wholly owned subsidiary of Udenna, has signed a sale and purchase agreement (SPA) to acquire 100 percent of the shares of Chevron Malampaya LLC (CMLLC), a wholly owned subsidiary of Chevron Philippines Ltd. (Chevron), which holds Chevron’s entire 45 percent non-operated interest in the Malampaya gas field in the Philippines,” Udenna said.

The Malampaya project is developed and operated by Shell Philippines Exploration BV with a 45-percent stake on behalf of joint-venture partners Chevron which also has a 45-percent stake and PNOCEC (Philippine National Oil Co.-Exploration Corp.), which holds the remaining 10 percent.

Uy, CEO and chairman of Udenna, said his group believes in the benefit of promoting natural gas as an essential fuel to support the country’s growing energy needs and economic growth.

The Malampaya gas field, located in Palawan, is the Philippines’ largest and only commercially producing gas field.

The Malampaya consortium has already made a formal request with the Department of Energy to extend its contract with the government.

The facility is said to be on the tail end of its lifespan with the gas already depleted by 2022, but Energy Secretary Alfonso Cusi believes that there might still be enough gas until 2027.

The Malampaya fuels roughly 40 to 50 percent of Luzon’s power requirements.