Udenna admits Malampaya gas deficiency, plans to drill new wells


Dennis Uy’s Udenna Corporation has finally raised concerns regarding the production shortfall of the Malampaya gas field, which could worsen the country’s current power problems. 

Malampaya Energy XP Pte. Ltd. (MEXP), the Udenna unit that bought Shell’s 45% share in the gas project back in May, said that the country will surely be short of natural gas by 2022.

Malampaya’s reserves reportedly may hit rock-bottom as early as next year. Among the signs leading to this possible scenario are the gas production restrictions, two of which have happened this year. More restrictions are expected as the supply continues to decline. The first restriction from March 31-June 14 was a key factor in the Red Alerts and rotational brownouts in Luzon from May 31-June 2 with the derating of the Ilijan gas-fired power plant.

MEXP specified that it will support the government’s efforts to achieve energy security, hinting that it will be the one to pursue new round of drillings that could possibly replenish the Malampaya’s output as well as extend its production life cycle.

The firm also said that it is set to rejuvenate Malampaya through a drilling campaign once it completes the acquisition of Shell Philippines Exploration B.V. (SPEX). MEXP head Belinda Racela said once the transaction is completed, the Udenna firm will be focused on ensuring continued safe and reliable operations of the Malampaya assets, finalizing a bridging solution and the exploration program to augment the gas production. SPEX earlier said that it will be having a six-month transition period for MEXP to learn the ropes of the gas field’s operations.

Racela said that the Department of Energy (DOE), which is still reviewing the Shell-Udenna deal, can attest to a number of exploration opportunities inside the Service Contract (SC) 38 license area and that the Malampaya consortium is going to develop these to its full potential. SC38 expires in 2024, but there have been talks of extending the contract’s lifespan.

She noted that while there is enough gas to meet their current obligations to customers, it’s not enough for additional demand, which is why exploration and development projects need to start soon. 

Meanwhile, the Senate Committee on Energy will continue to investigate Udenna’s acquisition deals with Chevron and SPEX even though the DOE has already cleared one of the transactions. Last week, committee chairman Sen. Sherwin Gatchalian questioned MEXP’s financial capability, supposedly having a paid-up capital of only $100 (around Php5,000)

Udenna, however, defended MEXP’s $460 million purchase of SPEX, saying it has the funds to operate the Malampaya and that it would have over Php10 billion in cash upon the share sale’s completion.