PNOC-Exploration Corporation (PNOC-EC) has withheld its consent on the sale of Shell Philippines Exploration B.V.’s (SPEX) 45% interest in the Malampaya gas-to-power project to Udenna Corporation unit Malampaya Energy XP.
At the Senate’s hearing on Wednesday, PNOC-EC President and CEO Rozzano Briguez revealed that the government-run firm officially communicated its move. PNOC-EC owns ten percent of Malampaya.
As a result, SPEX managing counsel Atty. Kiril Caral said the firm would not be able to complete the $460 million transaction “at the moment.” While SPEX was “very disappointed” at PNOC-EC’s decision, Atty. Caral said Malampaya’s current operator would continue to engage with the state-run firm to find out if there’s anything that can be done to address its concerns.
The Shell-Udenna transaction took place back in May and was targeted for completion by the end of the year. The deal sparked controversy as Davao-based Udenna would have 90% control of Malampaya, should the Department of Energy approve it. Udenna bought Chevron’s 45% stake in March 2020.
Aside from Udenna owner Dennis Uy’s perceived closeness to Pres. Rodrigo Duterte, whom he supported in the 2016 elections, several parties questioned the company’s capability to handle Malampaya when its finances are supposedly in the red. Uy himself, on the other hand, insisted that Udenna had sufficient capital.
Sen. Sherwin Gatchalian, chairman of the Senate Committee on Energy, asked Briguez on the implication of their decision. However, Briguez asked to refrain from answering “out of respect and in deference to the other parties” since the decision was only recently made.