DENNIS UY-LED Udenna Corp. now controls 90 percent of the Malampaya gas-to-power project after Shell Petroleum N.V. sold its entire stake in the gas project for a total of $460 million.
A Sale and Purchase Agreement (SPA) was signed Thursday with Malampaya Energy XP Pte Ltd. for the sale of Shell Petroleum’s 100-percent shareholding in Shell Philippines Exploration B.V. (SPEX).
SPEX holds a 45-percent operating interest in Service Contract 38 (SC38), which includes the producing Malampaya gas field. The other partners in SC38 are UC38 LLC, another subsidiary of UC (45 percent), and Philippine National Oil Company Exploration Corporation (10 percent).
“The base consideration for the sale is $380 million, with additional payments of up to $80 million between 2022 and 2024 contingent on asset performance and commodity prices,” a statement from Shell Philippines said.
The deal is still subject to partner and regulatory approvals. The transaction is targeted to be completed by the end of 2021.
“Since it began commercial operations in 2002, Malampaya has supplied a significant portion of the Philippines’s energy demand and it will continue powering the country with indigenous gas following a safe transition of the asset and its experienced work force,” said Wael Sawan, Shell’s Upstream
director. “Today’s announcement is consistent with Shell’s efforts to shift our Upstream portfolio to one that is focused on nine core positions.”
This deal has no impact on other Shell businesses in country. The Philippines remains an important country for Shell after over a century of successful operations. Shell will continue to pursue opportunities in the Philippines where it can leverage its global expertise in line with its strategy.
“Shell and the country leadership will always be grateful for the dedication, professionalism, and support that the entire SPEX organization has contributed to the wider SciP [Shell companies in the Philippines] family in particular, and to our country in general,” said SciP Country Chairman Cesar Romero.
In April this year, the Department of Energy (DOE) has approved the transfer of Chevron Malampaya LLC’s 45-percent stake to UC Malampaya Pte. Ltd.
“We are tremendously proud of Malampaya Energy for acquiring one of Shell’s most successful natural gas assets in Asia, which of course includes the world-class SPEX team currently operating Malampaya,” said Uy, UC chairman and CEO.
Malampaya delivers a fifth of the Philippines’s growing electricity requirements through the supply of natural gas to five power plants in Luzon. The asset has been operating safely and reliably since 2002 and has contributed over $10 billion in revenues to the Philippine government to date.
SPEX staff will be retained by Malampaya Energy. “The ongoing safety and reliability of Malampaya is our top priority and will be delivered by the same experienced team of upstream professionals from SPEX working with consistent practices. They will be strongly supported by our newly established Upstream Decision Review Board of industry leaders and the ex-Chevron and ex-Shell upstream specialists in our Malampaya Energy business, who are already actively involved in managing the Malampaya consortium,” said Belinda Racela, top executive of Malampaya Energy.
“We are excited about the future growth opportunities at Malampaya. Our teams are accelerating exploration and production plans to extend the life of the Malampaya field and expand supplies of affordable, safe, low-carbon and indigenous energy for the nation,” Racela added.