Enrique Razon-led Prime Infra Holdings said it is poised to acquire a controlling stake in the Malampaya gas-to-power project in Palawan from Udenna Corporation of Davao-based tycoon Dennis Uy.
Prime Infra said the acquisition process has kicked off and will close subject to the consent of various parties including the Department of Energy (DOE) and the PNOC-Exploration Corporation (PNOC-EC). The transaction will also go through other regulatory and lenders’ approvals.
The Razon group’s upcoming acquisition of Malampaya signals its entry into the natural gas industry. Prime Infra said this aligns with its purpose to create better lives and resilient economies through critical infrastructure coupled by its aspiration to help its customers transition to cleaner energy resources to fuel the country’s economic growth.
With Malampaya’s Service Contract 38 expiring in 2024, Prime Infra intends to apply for an extension, so the firm can invest in its expansion.
“The transition of the operations of Malampaya is critically urgent. Prime Infra and Udenna, as the new operators taking over from [Shell Philippines Exploration B.V. (SPEX)], will need to immediately plan for the expansion to ensure the continuity of the production as long as the reserves support it,” Prime Infra said in a statement.
Based on a Reuters report last month, Razon was among the preferred bidders for Udenna’s Malampaya interests. Malampaya is the Philippines’ only major source of indigenous natural gas, which supplies around 30% of Luzon’s energy demand and 20% of the entire country’s.
Udenna acquired 45% of Malampaya from Chevron in March 2020, which the DOE approved in April 2021. A month later, the Uy-led firm announced the purchase of the other 45% from SPEX. PNOC-EC owns the remaining ten percent on behalf of the government.
Numerous questions have been raised over Udenna’s acquisitions given that Uy was a major financier of outgoing Pres. Rodrigo Duterte’s campaign in 2016.
“Natural gas is a critical transition fuel and the modern, state-of-the-art infrastructure built to harness this valuable transition fuel attracted us to pursue this deal – all aspects of the project ticks off our environmental, social, and governance (ESG) check list that will allow us to contribute more to the country’s transition from expensive and volatile coal and imported fuel prices to affordable cleaner and domestic energy resources like natural gas,” Razon said.
“Also, there is a sense of ownership to achieving national energy independence when you bring in Filipino companies to handle the reins of a critical power infrastructure and this is what Prime Infra aims to do with our participation in Malampaya. We will invest and sustain the development and production of domestic gas as long as the terms of the operating license and the natural resources permit,” he added.
Udenna, meanwhile, is optimistic about the participation of the Razon Group in Malampaya, further strengthening the capability of Filipino-run companies to meet the power demand that picked up after COVID-19 restrictions were lifted resulting in the resumption of economic activities.
“We look forward to this opportunity to partner with Prime Infrastructure and PNOC-EC, as we explore more ways to fulfill our common vision to make Malampaya sustain its capability to meet the urgent energy security [needs] of the Philippines,” said Uy, Udenna’s Chairman and CEO.
