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PXP Energy’s Malampaya offer declined

 

THE Department of Energy (DoE) has declined PXP Energy Corp.’s unsolicited proposal to assume the operations of the $4.5-billion Malampaya gas field off Palawan, an agency official said on Monday.

In a briefing on the 2019 National Energy Consciousness Month at the DoE headquarters in Taguig City, Energy Secretary Leonido Pulido 3rd told reporters that the agency had to deny the proposal — which PXP Energy submitted last month — because it was “over an area with an existing service contract.”

According to Pulido, the upstream oil and gas company of tycoon Manuel Pangilinan had submitted a bid for the existing Service Contract (SC) 38 — already held by the consortium of Shell Philippines Exploration B.V., Chevron Malampaya LLC and state-run PNOC Exploration Corp. — covering the Malampaya Deep Water Gas-to-Power Project. The contract ends in 2024.



“The reason is very basic: We have [the] Philippine Conventional Energy Contracting Program and under that legal framework, we only have two ways to award service contracts and oil exploration permits. One is through predetermined areas and nomination,” he said.

In its proposal, PXP Energy cited the strategic position of the Malampaya infrastructure and distribution network in the South China Sea (West Philippine Sea).

It “is envisioned to support the continued development of the Malampaya resources, as well as the economic development of Sampaguita Field and other nearby prospects under SC 72,” PXP Energy President Daniel Stephen Carlos said in its letter, referring to Recto Bank, which is southwest of Malampaya and covers 8,800 square kilometers.

The listed firm, through Forum Energy Ltd., has a 70-percent participating interest in SC 72.

Exploration of the area has been stalled in 2014, when then-president Benigno Aquino 3rd imposed a moratorium on all exploration and drilling works in disputed areas amid escalating tensions with China over the strategic sea.

“The project intends to ensure energy security to the country from indigenous natural gas resources for the next 25 years and beyond, while bringing in significant revenues to the Philippine government. The use of the Malampaya facilities as the integrated gas hub will also support the development of a robust indigenous gas industry,” Carlos said.

PXP Energy has signified its interest to acquire Chevron’s 45-percent ownership in SC 38 through the right to match of the other SC 38 consortium members.

Instead, Chevron’s stake was sold to Dennis Uy’s Udenna Corp. through its wholly owned subsidiary UC Malampaya Philippines Pte. Ltd., which involves 100-percent shares of Chevron Malampaya LLC, a wholly-owned subsidiary of Chevron Philippines Ltd.

This transaction is subject to regulatory approvals, including that from the Philippine Competition Commission. Udenna has said it is not a participant in any other upstream fields nor in any links of the gas-to-power value chain. As a result, Udenna is free of any conflicts of interest with regard to this acquisition.

PXP Energy shares increased by 4 centavos or 0.38 percent to close at P10.52 each on Monday.

 

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