Prime Infra Holdings Inc. of business tycoon Enrique Razon Jr. is poised to acquire a controlling stake of Udenna Corp. in the Malampaya deep-water gas-to-power project.
Prime Infra in a statement said the acquisition process has started and will close subject to the consent of various parties and regulatory and lender approvals.
“The entry of Prime Infra into the natural gas industry aligns with its purpose to create better lives and resilient economies through critical infrastructure coupled by its aspiration to help its customers transition to cleaner energy resources to fuel the economic growth of the Philippines,” the company said in a statement.
However, the parties did not disclose the amount involved in the acquisition but said Prime Infra’s entry will ensure the facility will continue operating even beyond Malampaya’s service contract expiration in 2024.
“Natural gas is a critical transition fuel and the modern, state-of-the-art infrastructure built to harness this valuable transition fuel attracted us to pursue this deal — all aspects of the project ticks off our environmental, social, and governance check list that will allow us to contribute more to the country’s transition from expensive and volatile coal and imported fuel prices to affordable cleaner and domestic energy resources like natural gas,” said Razon, Prime Infra chairman.
Razon said the transition of the operations of Malampaya is critically urgent and will require an immediate plan for expansion to ensure continuity of production as long as reserves can support it.
“Also, there is a sense of ownership to achieving national energy independence when you bring in Filipino companies to handle the reins of a critical power infrastructure and this is what Prime Infra aims to do with our participation in Malampaya. We will invest and sustain the development and production of domestic gas as long as the terms of the operating license and the natural resources permit,” Razon added.
Udenna Corp. said it is optimistic in the participation of the Razon Group in Malampaya, adding it can further strengthen the capability of Filipino-run companies to meet the country’s power demand.
“We look forward to this opportunity to partner with Prime Infrastructure and PNOC-EC, as we explore more ways to fulfill our common vision to make Malampaya sustain its capability to meet the urgent energy security need of the Philippines,” said Dennis Uy, Udenna chairman and chief executive officer, in a statement.
In 2020, Udenna acquired a 45 percent of shares from Chevron Malampaya LLC that was under Chevron Philippines Ltd.
Through Malampaya Energy XP Pte Ltd., Udenna also purchased Shell Philippines Exploration B.V.’s other 45-percent operating interest in Malampaya to bring Uy’s current total interest in the facility to 90 percent.
The remaining 10 percent is held by the state-owned Philippine National Oil Corp.-Exploration Corp.
Business groups, lawyers and the Senate questioned the experience and competence of Uy’s group as well as the financial capability of Udenna to purchase the asset.
Data as of May 2021 provided by the Senate Committee on Energy said that the Malampaya resource’s current estimated remaining fuel is at 858,834 million standard cubic feet and would be completely exhausted by the first quarter of 2027.
The asset is currently the sole source of fuel for the country’s natural gas-fired power plants which powers around 40 percent of the Luzon Grid demand.– Jed Macapagal
