PNOC-EC can still raise Malampaya stake – Cusi

MANILA, Philippines — State-run PNOC Exploration Corp. (PNOC-EC) still has a chance to raise its stake in Service Contract (SC) 38, which covers the Malampaya gas project, Energy Secretary Alfonso Cusi said.

During the virtual membership meeting of the Rotary Club of Manila yesterday, Cusi said the sale between Shell Philippines Exploration B.V. (SPEX) to businessman Dennis Uy’s Malampaya Energy XP Pte Ltd. has not yet been completed since PNOC-EC has not given its consent to the transaction.

“We waived our right to match but did not give consent, so the sale has not yet concluded. Negotiations are still ongoing,” the energy chief said.

“There is a possibility that we might be able to get certain percentage of Shell’s share, PNOC-EC might get that. They are currently in discussion,” he said.

PNOC-EC holds a 10 percent stake in the Malampaya project.

In May last year, Shell Petroleum N.V. signed a sale and purchase agreement with MEXP for the sale of its 100 percent shareholding in SPEX for a total of $460 million, of which $380 million was paid upfront and additional payments of up to $80 million between 2022 to 2024 contingent on asset performance and commodity prices.

PNOC-EC waived its right-to-match option for the 45-percent stake of SPEX in Malampaya.

But in a Senate hearing in December last year, the state-run firm announced it withheld its consent to the sale of SPEX’s 45 percent operating interest in the Malampaya project to MEXP.

During the meeting, the Rotary Club of Manila (RCM) proposed to help government buy back the Malampaya project from the Uy’s two business units.

“This will definitely help the fiscal position of the Department of Finance (DOF) and strengthen the position of DOE/PNOC in the energy security program of the country,” RCM member Joel Valdez said.

Meanwhile, Udenna has maintained that its acquisition of Chevron’s interest in the Malampaya project is within the law.

SC 38 is the country’s most successful Petroleum Service Contracts (PSC) of 23 active projects. As the largest natural gas industrial project in the Philippines, it recovered all costs in four years.

Operating since 2001, the Malampaya project is the only local producer of indigenous natural gas. It supplies fuel to around 40 percent of gas-fired plants in Luzon, powering around 3,457 megawatts (MW) of power plants that provide power supply to the Luzon grid.