Dennis Uy seeks Malampaya takeover with gov't after Shell exit
MANILA, Philippines — Only 6 months after finalizing a sizable stake in the Philippines’ biggest natural gas venture off Palawan, Davao-based tycoon Dennis Uy is out to gain control of the project, together with its government partner, Philippine National Oil Corp.
Uy’s plans came after Shell Philippines Exploration B.V. reportedly plans to divest itself from SC38 in Malampaya deep water gas-to-power by selling its 45% stake. Currently, Uy’s UC Malampaya Philippines Pte. Ltd. holds another 45% of the project, while 10% belonged to PNOC.
“The Udenna Group firmly believes that Malampaya is a high-quality asset, strategic to the future welfare and energy security of the country and welcome our partner PNOC Exploration Corporation to join us in taking over the field on a 100% basis,” Raymond Zorrilla, company spokesman, said in a statement.
By expressing interest on Shell’s stake, Uy and PNOC will have the advantage of preemptive and consent rights should the oil firm ultimately decides to go out of Malampaya, a prized possession that has lured tycoons such as Ramon Ang of San Miguel Corp. and Manuel V. Pangilinan.
Cesar Abaricia, communications manager at Shell, said there is “no update yet” regarding the sale. Energy department officials have not responded to queries as of this posting. Zorrilla said finding a new investor in Malampaya “needs to be resolved as soon as possible.”
Conflict of interest?
It was only last March when antitrust regulators cleared UC Malampaya’s purchase of Chevron Malampaya LLC’s 45% share in the natural gas project, which accounts for 40% of Luzon’s annual energy requirements.
Stressing that both UC Malampaya and PNOC are qualified to take on Shell’s stake, Zorrilla said both companies currently do not operate “downstream gas and electricity business” that they view are “conflicts of interest” in securing partnerships.
San Miguel currently owns 68% of Petron Corp., one of the country’s big three oil players, while Pangilinan controls Manila Electric Co., the country’s largest power distributor.
Apart from these supposedly conflicting businesses, Zorrilla said a new player in Malampaya would require it to “evaluate” “complicated issues” in the natural gas project, potentially delaying its entry.
“We are fortunate that the Malampaya workforce composed of Filipinos have had the benefit of years of training by Shell and are in fact the lifeblood of the project,” Zorrilla said. “It is the remaining Consortium members’ responsibility to ensure that they remain secure in the knowledge that their service to the country shall continue.”
That said, Zorrilla clarified any changes in Malampaya ownership should “in no way impact operations” of Malampaya.
The gas project, operational since 2001, is seen for decommissioning between 2027 and 2029 after a projected decline in energy output starting 2024. Malampaya also generates revenues for both national and local governments in the form of royalties. Last year, the former’s share, which accounted for 60% of total, reached P26.57 billion.
Shares in Shell went down 1.43% to start the week on Monday at P16.6 apiece.