UDENNA Corp. (UC) said Tuesday that no group can repeal the deals it entered into with Shell and Chevron, which sold their entire Malampaya shares to the group of Davao-based businessman Dennis Uy.
“Let us be clear that there is no law requiring approval of transfer of shares of companies that have interest in Malampaya,” UC spokesperson Atty. Raymond Zorrilla said in a statement. “Therefore, no party has the legal ability to rescind the Chevron and Shell transactions.”
UC, he added, is “well aware” of the allegations and supposed false narratives flooding the media and even in private groups on social media.
Last week, the Association of Filipinos for the Advancement of Geosciences (AFAG) urged government to rescind the UC Malampaya Philippines-Chevron Malampaya deal. It also does not want the Shell Philippines Exploration B.V. (Spex)-Malampaya Energy to push through.
Instead, AFAG wants the Philippine government to take over the Service Contract 38 or the Malampaya service contract.
“If government does not take full control and management of SC 38, the Filipino people is deprived of about P42-billion net profits from Malampaya. Further, full government control will greatly enhance the country’s energy security,” AFAG said.
AFAG was referring to Philippine National Oil Company- Exploration Corp. (PNOC-EC), which has a 10-percent stake in the Malampaya consortium.
“The government through PNOC-EC can take advantage of the profitability of the Malampaya gas reserves to arrange the necessary financing and technical expertise, both local and international, to take over and safely and efficiently operate the Malampaya facilities,” it added.
Also, graft charges were filed before the Office of the Ombudsman against Energy Secretary Alfonso Cusi, Uy, and officials of Chevron Philippines and Shell Philippines Exploration B.V.
UC, however, defended the deals, saying the transfers of Chevron and Shell shares underwent strict bidding processes and due diligence by both multinational oil and gas players. Zorrilla also said the share sales were above board and legal and had to pass thorough scrutiny by Philippine regulators, international lenders, and the said private multinationals involved.
“Udenna as key investor in UC Malampaya Philippines will stand by this legal position. We, in Udenna, believe that UC Malampaya Philippines Pte Ltd, is qualified to be the shareholder of the Chevron company, and in the future, to become the shareholder of the existing operator via Malampaya Energy XP,” he said. “ We were awarded because of the depth of our understanding of the business—how it should be managed and how it can be rejuvenated.”
The UC Malampaya Philippines-Chevron Malampaya deal was approved by the Department of Energy (DOE) in April this year. After the deal was finalized, Chevron Malampaya was renamed UC38 LLC.
Senate Energy Committee Chairman Senator Sherwin Gatchalian has branded the Chevron-Udenna deal as “defective and invalid,” citing a lot of inconsistency. “We got more confused by the DOE’s own admission that there is indeed confusion,” Gatchalian said.
Gatchalian sought the clarification after learning from Cusi that no prior approval by the government was needed in Chevron’s transfer of its stake to Udenna’s UC Malampaya Philippines Pte Ltd. and that it was based on an evaluation using the “farm-in process” that, the senator noted, only made DOE’s explanation all the more confusing.
“Nowhere in the documents that the DOE submitted can you find the argument of using the farm-in [rule],” Gatchalian said, noting that “from day one, we were made to understand this should be approved by the government and the process will follow PD 87 and DC 2007.”
He was referring to DOE’s Department Circular 2007-04-003 prescribing the guidelines and procedures for the transfer of rights and obligations in petroleum service contracts under Presidential Decree 87.
Gatchalian recalled that the DOE earlier said, “The government should not review and approve it, but the DOE is now saying it approved the transaction but used a different method.”
He added, “when I reviewed the documents, there is no such disclaimer that the DOE used a different method. So, all along, in our minds the transaction went through the normal process of DC 2007.”
The DOE has yet to approve the transaction involving Spex’s sale of 45-percent operating interest in the Malampaya gas project to Malampaya Energy. Pending review of this deal, the Davao businessman has a 90-percent operating interest in the Malampaya Service Contract No. 38.
Zorrilla said the Senate and other misinformed individuals should focus on the reality that given the decline of the Malampaya gas, “The asset will only be able to service six percent of Luzon by 2024 unless immediate actions are taken to arrest its quick decline and prevent its eventual end by 2027,” said Zorrilla.