Business groups urged the Senate to continue its investigations on the pending takeover of the Dennis Uy-led oil and gas exploration firm Malampaya Energy XP of the Malampaya natural gas resource.
The statement was jointly signed by the Energy Lawyers Association of the Philippines; the Financial Executives Institute of the Philippines; the Filipina CEO Circle; the Integrity Initiative Inc.; the Investment Houses Association of the Philippines; the Makati Business Club; the Philippine Women’s Economic Network; and the Women’s Business Council Philippines.
The groups said the investigation would clarify if indeed government did not exercise its right of first refusal over Chevron’s and Shell’s shares in Malampaya as it could have provided the State with additional income.
“We urge the Senate and the concerned agencies and groups to fully explore why the government did not exercise its right of first refusal over Chevron’s and Shell’s shares in Malampaya. By failing to do so, the government may have given up tens of billions of pesos at a time when the government needs money more than ever and more importantly has put the country’s energy and national security at risk,” the statement said.
The groups said as government may have reservations in purchasing the asset, the Senate could explore other ways to secure financing deals, as was done by Malampaya Energy.
“We further urge them to fully explore why the government failed to award a licence whether extension or to a new consortium by 2019. From an energy security standpoint, the delay may be a breach of fiduciary duty given that the existing wells are expected to be depleted by 2025 and the estimated five years needed to explore and develop additional wells,” the statement further read.
The groups also said government should scrutinize Malampaya Energy’s financial and technical capabilities.
Malampaya Energy assured it has enough capability and resources to take over the operations of the country’s current sole natural gas resource as its acquisition of Shell Philippines Exploration B.V.’s (SPEX) 45 percent operating interest in the Malampaya gas field is supported by “international reputable financial institutions.”
The transaction between SPEX and Malampaya Energy has a base consideration of $380 million with additional payments of up to $80 million between 2022 to 2024 contingent on asset performance and commodity prices.
Malampaya Energy added upon the completion of the share sale with SPEX, it will still have over P10 billion worth of cash.
If the transaction between SPEX and Malampaya Energy is pursued, 90 percent of the Malampaya resource will be controlled by Udenna Corp. with the remaining 10 percent owned by PNOC-Exploration Corp.
