After more than a year of waiting, the Department of Energy (DOE) has officially approved the sale of Chevron’s 45% share in the Malampaya gas-to-power project to Udenna Corporation of Davao-based magnate Dennis Uy.
Based on a Manila Bulletin report, the DOE specified in a formal correspondence to the Malampaya consortium that it found that the acquisition of UC 38 LLC to be acceptable following the review and evaluation of Service Contact (SC) 38.
Udenna completed the Php27.4 billion purchase from Chevron in March last year.
UC 38 LLC, Udenna’s subsidiary for the project, is now part of the Malampaya consortium, of which Shell Philippines Exploration B.V. (SPEX) holds the other 45% and the government, through PNOC-Exploration Corporation owns the remaining ten percent.
SC38 is the contract for the commercial development and other arrangements between the Malampaya consortium and the Philippine government in the operations of the gas field. It also covers the royalty sharing covenant that the parties-in-interest had agreed upon in the venture. The contract is set to expire in 2024.
Last year, senators led by Senate energy committee chairman Sherwin Gatchalian questioned Udenna’s technical capability to manage and operate the Malampaya project, He particularly pointed out that it can’t acquire or develop the resources needed at that time.
Energy Sec. Alfonso, then, argued that the DOE found no “violation” in the sale transaction of Udenna’s purchase of Chevron’s stake in the Malampaya project, and that the documents signed by the parties remain to be “voidable.”
Uy, as well as fellow taipans Manny V. Pangilinan of the MVP Group and Ramon Ang of San Miguel Corporation have expressed interest in purchasing SPEX’s 45% stake. Ang, however, backed out, leaving Pangilinan and Uy in a head-to-head battle. The DOE’s approval of Udenna’s purchase is expected to give more solid ground for the Uy-led firm to invoke its right of first refusal in the acquisition of SPEX’s interest.