MANILA, Philippines — Energy Secretary Alfonso Cusi said Friday that the probable entry of the infrastructure company of tycoon Enrique Razon Jr. in the Malampaya gas-to-power project bodes well for the country's energy sector.
This came shortly after Prime Infra Holdings, Razon's infrastructure arm, confirmed that it will be acquiring a controlling stake in the Malampaya project from Davao-based businessman and Udenna Corp. President and Chairman Dennis Uy, who is reportedly putting up some of his high-value assets for sale. However, the move is subject to the consent of the Department of Energy (DOE) and the state-run Philippine National Oil Co. Exploration Corp.
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Uy, a campaign donor of President Rodrigo Duterte, currently holds 90% share in the offshore gas field, which he bought from Chevron and Shell.
"The potential entry of Prime Infrastructure, owned by Mr. Enrique K. Razon Jr., as partner of the Udenna Corp. – which is in the process of purchasing Shell Philippines Exploration B.V. (SPEX), is a positive development not only for the Malampaya consortium, but also the power sector as a whole," Cusi said in a statement on Friday.
SPEX holds a 45% operating interest in petroleum service contract (SC) 38, which includes the Malampaya gas field.
According to Cusi, Razon's involvement in the project "could further improve the financial standing and technical experience of the consortium, and more importantly, facilitate the progress of much needed and urgent development of Malampaya, given the depleting reserves in the existing wells."
The Energy secretary added that the keen interest of investors in SC 38 proves that the Malampaya service contract is "economically viable", and an attractive investment in the upstream oil and gas sector.
The Malampaya project is the country's only indigenous gas field which delivers up to 20% of the Philippines' energy requirements.
It is expected to be decommissioned between 2027 and 2029 due to a foreseen decline in energy output in 2024— by that time, the project will only be able to provide gas sufficient for 1,000 megawatts (MW) of power. In 2021, the gas field was able to provide 3,000 MW worth of power.
Cusi said that the Malampaya project is one of the Department of Energy's top priorities in ensuring energy security for the country amid the power crisis due to the geopolitical war between Ukraine and Russia.
The war between the two countries partly worsened the supply of oil in the global market, which the Philippines is highly dependent on. This, in turn, led to local oil companies to raise petroleum prices since the start of the year.