Industry group backs Malampaya firm

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The operator of the Malampaya natural gas facility is claiming to have secured the support of an industry group in an ongoing dispute with state auditors.

Sebastian C. Quiniones, managing director of Shell Philippines Exploration B.V. (SPEX) and president of the Petroleum Association of the Philippines (PAP), said the industry group wanted fiscal stability for the Malampaya consortium and other investors.

SPEX has a 45 percent stake in the consortium, with the rest held by Chevron Malampaya LLC (45 percent) and state-owned PNOC Exploration Corp. (10 percent).

The consortium has sought international arbitration in the wake of the Commission on Audit’s (COA) insisting that it had P53.14 billion in income tax underpayments. State auditors want the Energy department to collect but the latter has sided with the Malampaya firm.


“The Petroleum Association of the Philippines wants us to have fiscal stability … it’s the desire of our service contractors that are here already operating,” Quinones said.

“We have discussed it with [Energy] Undersecretary Zenaida Monsada. We verbalized what we’re aiming for and we’re working with the Department of Energy,” he added.

The Energy department has said that the liabilities were already covered by a 60 percent share remitted from 2002 to 2009. A joint petition for review with the consortium was rejected by the COA last April 6 and another motion was filed last June 16.

The firm also took the dispute a step further by filing for arbitration in Singapore.

“We want to settle amicably. We are also looking at all the legal remedies and obviously, the consortium will go through the legal remedies,” Quiniones said.

“We’re discussing things with government that’s why we’re looking for an amicable settlement,” he added.

From 2001 to 2014, the consortium has been able to remit a $8.5 billion in royalties to the government.

The government uses the royalties for energy projects such as the fuel purchases for the National Power Corp.’s Small Power Utilities Group.

Under the service contract agreement, 70 percent of gross proceeds from the sale of natural gas goes to the contractor to allow it to recover investment costs. The remaining 30 percent is shared by the government and the consortium on a 60-40 basis.

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