PCC OKs Udenna’s acquisition of Chevron’s Malampaya stake

MANILA, Philippines — Davao-based businessman Dennis Uy has obtained the green light from the Philippine Competition Commission (PCC) to acquire Chevron’s stake in the Malampaya deep water gas to power project in offshore Palawan.

Uy’s Udenna Corp., through its subsidiary UC Malampaya Philippines Pte. Ltd., acquired the 45 percent stake of Chevron Malampaya LLC in Service Contract No. 38 which covers the development of the Malampaya contract area in Northwest Palawan.

The $4.5 billion Malampaya project is developed and operated by Shell Philippines Exploration BV with a 45 percent stake on behalf of joint venture partners Chevron, which had a 45 percent stake and Philippine National Oil Co.-Exploration Corp. which holds the remaining 10 percent.

Udenna, Uy’s holding company, is the buyer guarantor.

PCC, the government’s anti-trust body, approved the transaction as it would not result in substantial lessening of competition.

“This is because there are no horizontal or vertical relationships between the parties,” the PCC said in a recent decision.

The STAR broke the story last year that Chevron was selling its stake in Malampaya to Udenna Corp.

Shell, as a member of the Malampaya consortium,  had the right of first refusal should the other members sell their stake.

However, Shell did not exercise its right. In fact, it was Shell that sold the 45 percent stake to Chevron and the 10 percent to PNOC in the 1990s.

Pilipinas Shell president and chief executive officer Cesar Romero told The STAR last week that even in other projects worldwide, Shell traditionally holds just around 45 percent interest.

The Malampaya gas field, located in Palawan, is the Philippines’ largest and only commercially producing gas field.

For over two decades, Malampaya has been the cornerstone of the country’s gas industry and continues to service approximately 20 percent of the national demand for electricity.

The Malampaya consortium hopes to find several new wells in areas near the Malampaya well which could provide new gas supply for the country for at least 10 years.

As early as now, the consortium is already seeking an extension of the contract, which expires in 2024.

The ideal extension is 15 years, of which the consortium would spend five years to dig and explore new wells, one source said.