PNOC-EC withdraws consent to divestment of Shell’s Malampaya stake to Dennis Uy’s group

State-owned Philippine National Oil Company-Exploration Corporation (PNOC-EC) has withheld its consent for the divestment of Shell Philippines Exploration B.V.’s (SPEX) shares in the Malampaya gas field to Dennis Uy’s group.

In a Senate hearing on Wednesday, PNOC-EC President and Chief Executive Officer Lieutenant General Rozzano Briguez said the firm has decided not to give its consent to the transaction.

“As of 13 December 2021, PNOC-EC has officially communicated [to] SPEX that PNOC-EC is officially withholding its consent to the transaction,” he told senators in a hearing with the Committee on Energy.

To recall, Dutch petroleum giant SPEX in May said it signed a share purchase agreement with Dennis Uy’s Malampaya Energy XP Pte. Ltd. for 100% of its stake in the Malampaya gas field.

SPEX holds a 45% operating interest in the Malampaya gas field, with the base consideration for the sale reported at $380 million, with additional payments of up to $80 million between 2022 to 2024 contingent on asset performance and commodity prices.

Briguez said it will be up to SPEX to decide on the next steps following the withdrawal of its consent, and declined to elaborate on the matter as it has yet to substantiate its findings.

“Out of respect and deference to the other parties we beg the committee’s understanding not to disclose the reasons behind our decision as of the moment because our other partners and our stockholders has to be informed first,” he said.

“Right now, I think we are still into the process wherein the operator of the service contract that is SPEX might communicate to us and ask clarification on it or maybe ask clarification on our giving of no consent, withholding of our consent so that’s where we are right now,” he added.

Should the sale of Shell’s Malampaya stake to Malampaya Energy push through, Uy’s group will gain 90% control of the gas field, after it earlier bought out the 45% stake of Chevron Philippines.

For its part, Shell said it has already received the letter from PNOC-EC, but it is still awaiting the details on the basis of the consent withdrawal, which Briguez said may be later divulged in an executive session.

“Of course we are very disappointed at the outcome of the decision of PNOC-EC. However, we will continue to engage with them to find out if there is anything we can do to address the concerns that might have led them to this decision,” SPEX managing counsel Kiril Caral said in the same hearing.

“Without the consent of PNOC-EC, we will not be able to proceed with completion at the moment,” he added.

Caral said representatives of both PNOC-EC and SPEX will first have to meet and discuss the reasons for the basis of the decision, and this will dictate the steps to be taken.

“I would not go beyond that at this point until we have clearer picture of the reasons behind the action taken by the board of PNOC-EC,” he said.

Energy Secretary Alfonso Cusi also said that without the consent, there may be nothing to evaluate for the agency.

“Of course they have to go through that process. Now what are we going to evaluate? That’s what I think that has also been the issue before when we said that we are not evaluating because we don’t have the necessary documents, so we’ll await for that,” he explained.

Dennis Uy was one of President Rodrigo Duterte’s top contributors during the 2016 campaign with P30 million in contributions, while his wife Cherylyn contributed P1 million, based on GMA Research.

Cusi has maintained that the buy-in of Uy’s business into the Malampaya consortium was not a midnight deal, as he said the transaction is beyond the department’s purview.

He has also filed libel cases against several news organizations that reported on his and Uy's facing graft complaints involving the Malampaya transaction.

Meanwhile, Committee on Energy Chairman Senator Sherwin Gatchalian welcomed the PNOC-EC decision, noting that it will benefit the future generations.

“The decision you made is a decision that will protect the Filipino interest and a decision that will protect the next generations to come because this asset is not only an asset of present concern but an asset of future concerns,” he said.

“I laud and commend the decision of the PNOC-EC board for putting the interests of the Filipino people first and foremost, so I commend and am in support of that decision, and definitely that decision will not be put to waste because we recognize that the decision was made in order to protect our country,” he added. — BM, GMA News