The Department of Energy (DOE) has approved the acquisition by Prime Infrastructure Capital Inc. (Prime Infra) acquisition of Shell’s 45 percent interest in the Malampaya service contract (SC) 38 natural gas resource.
In a statement yesterday, the agency said after a thorough review, it found Prime Infra to be technically, financially and legally qualified as a transferee and as successor to Shell as operator of the Malampaya natural gas project.
DOE said as a result, Shell Philippines Exploration B.V. (SPEX) will become a wholly-owned subsidiary of Prime Infra. Afterwards, SPEX, as a Prime Infra subsidiary, is seen to continue to be technically competent and financially capable to operate the Malampaya gas field.
In a separate statement, Enrique Razon Jr., Prime Infra chairman, welcomed the development saying the company “will contribute by doing all that can be done to produce as much gas as possible to sustain production in support of the power demand in Luzon.”Razon said Prime Infra will assume full ownership and control of SPEX once the transition process for a safe and seamless handover of operations from Shell is completed, currently targeted for November 1 this year.
“Prime Infra is well-positioned to carry on the world-renowned track record of the Malampaya asset and therefore, the next urgent step for the company is to sustain and expand gas production while we promptly address the license extension for SC38,” said Guillaume Lucci, Prime Infra president and chief executive officer.
The DOE said its approval hinged on SPEX remaining as a subsidiary of Prime Infra and on the continuing validity of the latter’s commitments and undertakings to the government, in respect of SPEX’s obligations as operator of Malampaya.
The agency also said its review of the transaction has been guided by the state policy enunciated in Presidential Decree 87, “to hasten the discovery and production of indigenous petroleum through the utilization of government and/or private resources, local and foreign to yield the maximum benefit to the Filipino people and to assure just returns to participating private enterprises, particularly those that will provide the necessary services, financing and technology and fully assume all exploration risks.”
According to the DOE, the review also considered the need to maximize the utilization of the existing petroleum resources in Malampaya.
Previously, PNOC-Exploration Corp.’s (PNOC-EC) board gave its consent to the sale as a member of the consortium but an announcement of the decision dated September 22 was withheld, in deference to the completion of the review, the DOE noted.
After the transaction, Prime Infra will own 45 percent share in the natural gas project, with the other 45 percent held by Udenna through Chevron Malampaya LLC and the remaining 10 percent held by PNOC-EC.
The Malampaya project is considered as among the country’s most important power assets as it produces natural gas for power plants in Batangas that power up to 20 percent of Luzon’s total electricity requirements. It began operations in 2001, with the consortium’s license for the project set to expire in 2024. – Jed Macapagal
