RAZON-LED Prime Infrastructure Holdings, Inc. (Prime Infra) said on Thursday that it “is poised to acquire a controlling stake” in the Malampaya gas-to-power project, a move that is likely to be decided on by the incoming administration.
In a media release, Prime Infra said that the acquisition “has kicked off” and is subject to the consent of the Department of Energy (DoE) and state-led Philippine National Oil Co. Exploration Corp. (PNOC EC).
Prime Infra Chairman Enrique K. Razon, Jr. said the project “will allow us to contribute more to the country’s transition from expensive and volatile coal and imported fuel prices to affordable cleaner and domestic energy resources like natural gas.”
Prime Infra referred to the seller as Dennis A. Uy, chairman of Udenna Corp., whose business unit acquired the 45% stake in the deepwater project held by Chevron Malampaya LLC. The deal, forged in October 2019, was approved by the DoE in March 2021.
Another Udenna unit has a pending deal to acquire the 45% stake of Shell Philippines Exploration B.V. (SPEx) in an agreement forged in May 2021. The acquisition awaits the approval of the DoE, which in turn is waiting for the consent of PNOC EC.
PNOC EC holds the remaining 10% of the Malampaya project located northwest of Palawan island, West Philippine Sea. It previously withheld its consent to the SPEx sale, as disclosed by its top official in a Senate hearing held late last year.
In the media release, Prime Infra quoted Mr. Uy as saying: “We look forward to this opportunity to partner with Prime Infrastructure and PNOC EC, as we explore more ways to fulfill our common vision to make Malampaya sustain its capability to meet the urgent energy security need of the Philippines.”
Udenna has yet to respond to a request for confirmation of the deal.
A source at SPEx said in a text message that the sale transaction with Udenna’s Malampaya Energy XP Pte. Ltd. “remains active.” SPEx is the operator of the Malampaya gas project under Service Contract 38, which expires in 2024.
A source at Prime Infra who asked not to be named said in a phone interview that “realistically” the deal is not likely to be approved by officials of the current administration.
“Definitely, we don’t see it completing within the month,” the source said, referring to the end of the Duterte administration by June 30, 2022.
The source added that a “term sheet” after negotiations among parties will determine the exact share to be acquired by Mr. Razon’s group and from which entity.
But the source confirmed that Mr. Razon was not in talks with PNOC EC for the latter’s stake. “We don’t know if they are selling that.”
Prime Infra sees its entry into the natural gas industry as aligned “with its purpose to create better lives and resilient economies through critical infrastructure coupled by its aspiration to help its customers transition to cleaner energy resources to fuel the economic growth of the Philippines.”
“Malampaya’s service contract is set to expire in 2024 making it critical for Prime Infra’s entry to be able to continue operating the project while applying for an extension so it can invest in its expansion, which will sustain the economic and social benefits that Malampaya is providing for the country. The transition of the operations of Malampaya is critically urgent,” it said.
Prime Infra also said that along with Udenna as the “new operators” of the project after SPEx, they would need to plan for Malampaya’s expansion “to ensure the continuity of the production as long as the reserves support it.”
Senator Sherwin T. Gatchalian, who headed Senate hearings last year on the Malampaya share sale, described the offshore gas field as a “critical energy asset,” powering more than 4.5 million homes and businesses in Metro Manila and nearby areas.
“Malampaya has also provided significant income to the government, totaling P290.76 billion from January 2002 until June 30, 2021,” he previously said. — Victor V. Saulon