Several business groups have expressed their support for the Senate Committee on Energy’s probe into Udenna Corporation’s acquisitions of Chevron and Shell Philippines Exploration B.V’s (SPEX) shares in the Malampaya gas project, citing it as matters of both national and energy security risks.
In a joint statement released on Wednesday, the groups — which include the Financial Executives Institute of the Philippines (FINEX) and the Makati Business Club (MBC) — urged the Senate and other concerned agencies and groups to fully explore why the government did not exercise its right of first refusal over Chevron’s and Shell’s shares in Malampaya.
“[The] government may have given up tens of billions of pesos at a time when [it] needs money more than ever,” part of the statement read.
The groups also asked concerned agencies to look into why the government failed to award a license, whether through an extension or to a new consortium, in 2019.
“From an energy security standpoint, the delay may be a breach of fiduciary duty given that the existing wells are expected to be depleted by 2025, and [that an] estimated five years [are] needed to explore and develop additional wells,” the statement further read.
The groups understand the government’s reservations in buying the oil giants’ shares “even if [the government] knows these will offset by future revenue.” Nonetheless, they still want to Senate to find out if the government could easily get financing to purchase Chevron’s and Shell’s stakes, “given Malampaya’s stable and guaranteed revenue stream.”
Given Udenna’s “lack of expertise and heavily-financed nature” of its deals with Chevron and Shell, the groups say the Dennis Uy-led firm will “highly likely” take on partners.”
“The government should scrutinize the buyer’s financial and technical capabilities and interests and should reserve, enforce, and exercise its right to block and invalidate transfers of shares and control that may be disadvantageous to the Filipino people,” the statement read.
Other than FINEX and MBC, the Energy Lawyers Association of the Philippines, Filipina CEO Circle, Integrity Initiative Inc., Investment Houses Association of the Philippines, Philippine Women’s Economic Network and Women’s Business Council Philippines support the Senate probe.
Udenna first bought Chevron’s 45% in March 2020 and was approved by the Department of Energy (DOE) last April. Udenna bought SPEX a month later. The DOE aims to finish reviewing the Shell-Udenna deal this November.
Sen. Sherwin Gatchalian, who chairs his chamber’s energy committee, has questioned both transactions on various occasions, particularly with Udenna’s finances in the red. Three “concerned citizens” also filed graft charges against Uy, Energy Sec. Alfonso Cusi, and 24 others over Udenna’s Malampaya purchases. Former Philippine National Oil Company President Eduardo Mañalac had also said the share sales did not make sense since the government would earn billions from Malampaya once its Service Contract 38 expires in 2024.