DOE re-evaluating Chevron-Udenna deal after getting grilled

cusi-dennis uy

The Department of Energy (DOE) will “extensively review” a Udenna Group unit’s purchase of Chevron’s 45% stake in the Malampaya gas facility after the Senate questioned the sale of Shell’s 45% share to another Udenna subsidiary with supposedly a rather meager capitalization.

Energy Sec. Alfonso Cusi said he ordered his department’s officials to re-evaluate the sales purchase agreement between global firm Chevron and Udenna Corporation’s subsidiary UC Malampaya Philippines.

The Dennis Uy-led firm purchased Chevron’s interest in the gas project in March 2020 and was approved by the DOE in April.

“I have instructed our DOE officials to provide justifications of our legal, technical and financial evaluation with regard to the approval of transfer of the participating interest of Chevron to Udenna, pursuant to Petroleum [Service Contract] 38,” Cusi said in a statement.

Senators in Wednesday’s hearing raised eyebrows on the revelation that Udenna unit Malampaya Energy XP Pte. Ltd. (MEXP) — the winning bidder for the purchase of Shell Philippines Exploration B.V.’s (SPEX) 45% operating stake in Malampaya — has a capital of only $100 (around Php5,000).

Udenna announced in May that it was purchasing SPEX for $460 million. It was later reported that four foreign banks will help finance Udenna’s acquisition of SPEX, Malampaya’s operator.

“We will continue to exhaust all measures in thoroughly evaluating the legal, financial, and technical aspects of the transaction,” Cusi said.

Meanwhile, Udenna spokesperson Raymond Zorilla said that the group has sufficiently addressed the concern, emphasizing that Shell was satisfied with its financial capabilities. He added that the seller was in a better position to decide who is best suited to continue the operations in Malampaya.

In another statement, MEXP defended its financial clout, saying that Malampaya is a producing asset and generates sufficient free cash to fund its planned exploration activities. Both MEXP and UC Malampaya Philippines are said to have over Php10 billion in cash on their balance sheets.