Roughly two weeks after San Miguel Corporation (SMC) said that it submitted a non-binding offer to purchase the 45% stake of Shell Philippines Exploration B.V. (SPEX) in Malampaya, the diversified conglomerate now says it has decided not to submit a tender offer or bid to buy a chunk of the gas venture.
In a report by the Manila Bulletin, SMC President and COO Ramon Ang qualified that the company originally targeted to join the bidding, but later learned through its own study that the investment wasn’t viable, prompting it to drop the plan.
This now leaves business tycoons Manny V. Pangilinan and Dennis Uy going for a showdown over the country’s major source of indigenous gas.
Pangilinan said earlier his companies First Pacific and PXP Energy submitted a final non-binding offer to SPEX in late February. Meanwhile, Uy’s Udenna Corporation, which already holds the other 45% of Malampaya, is expected to invoke its “right of first refusal” under the terms of Malampaya’s Service Contract (SC) 38.
Udenna even went to the extent of inviting the government, through Philippine National Oil Company-Exploration Corporation (PNOC-EC), to be its partner in acquiring SPEX’s share. PNOC-EC owns the remaining ten percent of Malampaya, which currently supplies around 20% of the country’s power needs.
Udenna purchased its 45% share from its original owner Chevron last year. Though the Department of Energy (DOE) has yet to finally approve the transaction, various officials led by Sec. Alfonso Cusi have said they see no violation with the deal. Several senators have raised questions over Udenna’s technical capability citing lack of track record and amid a lack of government clearance.
SC38 is expiring in 2024, while Malampaya’s reserves are estimated to be depleted by 2027. Despite this, Pangilinan particularly mentioned that he is still eyeing Malampaya to make use of its existing pipelines to liquefied natural gas power plants in Batangas and connect them to PXP Energy’s SC72 (Recto Bank) and SC75 (Northwest Palawan) exploration ventures in the West Philippine Sea.
Talks are now in place for the possible extension of SC38.