Citing “enough evidence,” Sen. Sherwin Gatchalian said that the Department of Energy’s (DOE) decision to approve the sale of Chevron 45% stake in the Malampaya gas project to Dennis Uy’s Udenna Corporation is “defective and invalid.”
Gatchalian, chairman of the Senate Committee on Energy, made the statement after being told by Energy Sec. Alfonso Cusi that no prior approval by the government is needed in the Chevron’s transfer of its shares to Udenna’s UC Malampaya Philippines and that it was based on an evaluation using the so-called “farm-in process,” which according to the lawmaker made DOE’s explanation all the more confusing.
“Nowhere in the documents that the DOE submitted can you find the argument of using the farm-in (rule). From day one, we were made to understand that this should be approved by the government and the process will follow [Presidential Decree] (PD) 87 and [DOE Department Circular (DC) 2007-04-03],” Gatchalian pointed out.
DOE’s DC2007-04-003 details the guidelines and procedures for the transfer of rights and obligations in petroleum service contracts under PD 87, or the Oil Exploration and Development Act of 1972.
“The DOE earlier said the government should not review and approve it. But the DOE is now saying it approved the transaction but used a different method. When I reviewed the documents, there’s no such disclaimer that the DOE used a different method. So, all along in our minds the transaction went through the normal process of [the DC],” the senator said.
Gatchalian sought clarification from Cusi during the budget hearing as he dug up the statements given by Energy officials to the committee hearing in November 2020 affirming that the transaction between Udenna and Chevron requires prior approval of the DOE as stated under Section 11 of PD 87.
Positions aired by the DOE through then-Asec. Leonido Pulido III and subsequent submissions by the department to the Senate stated that the transfer of interest in the Malampaya gas field project must be approved by the agency before it becomes binding and effective.
The Chevron-Udenna transaction, which took place in March 2020, was approved by the DOE last April. Udenna subsequently bought the other 45% from Shell Philippines Exploration B.V. (SPEX) in May. Energy Asec. Gerardo Erguiza, Jr., in a briefing on Friday, said the DOE is looking to finalize is review of the Shell-Udenna deal in November.
Udenna’s Malampaya purchases have caught the ire of senators, with Gatchalian recently raising a red flag on the SPEX deal.
Uy was one of then-Davao City Mayor Rodrigo Duterte’s biggest financiers back in the 2016 presidential elections.