Razon’s Malampaya entry good for power sector — Cusi

The planned acquisition by ports and casino tycoon Enrique Razon Jr. of a controlling stake in the Malampaya gas-to-power project is a welcome development for the Philippine power sector, Energy Secretary Alfonso Cusi said Friday.

On Thursday, Razon’s infrastructure arm, Prime Infra Holdings Inc., announced that the acquisition process of a controlling stake in the Malampaya project from Davao-based tycoon Dennis Uy has already kicked off. 

Prime Infra’s entry into the Service Contract 38 or Malampaya gas field in offshore Palawan is still subject to the consent of various parties, including the Department of Energy (DOE) and the Philippine National Oil Company Exploration Corporation (PNOC-EC).

In a statement, Cusi said that Prime Infra’s potential entry into the Malampaya project "as partner of the Udenna Corporation—which is in the process of purchasing Shell Philippines Exploration B.V. (SPEX) is a positive development not only for the Malampaya consortium, but also for the power sector as a whole."

In May 2021, oil giant Shell disclosed that it had signed a share purchase agreement with Uy’s Malampaya Energy for the sale of its 100% shareholding in Shell Philippines Exploration B.V. (SPEX), which holds a 45% operating interest in Service Contract 38, or the Malampaya gas field.

Uy was supposed to hold 90% control of the gas field in offshore Palawan after it already bought out Chevron Philippines’ share in the Malampaya Consortium in 2020, which had a 45% participating interest in Service Contract 38.

The PNOC-EC, however, withheld its consent for the divestment of SPEX’s shares in the Malampaya gas field to Uy’s group, thus delaying its gain of 90% control of the gas field.

Cusi said that the involvement of Razon’s Prime Infra "could further improve the financial standing and technical experience of the consortium, and more importantly, facilitate the progress of the much needed and urgent development of Malampaya, given the depleting reserves in the existing wells."

The Energy chief also said the DOE "looks forward to SPEX continuing as the operator of Malampaya and rapidly progressing with the urgent drilling activities required to further develop Malampaya and arrest the depletion."

“Without which, at current depletion rates, Malampaya will only be able to provide gas sufficient for 1000MW of power by 2024 versus 3000MW in 2021,” Cusi said.

Prime Infra did not disclose how much of the Malampaya gas-to-power project it is poised to acquire from Uy’s group.

“At the outset, it must be emphasized that the uninterrupted operations and supply of natural gas from the Malampaya Deep Water Gas-to-Power Project remains to be one of the top priorities of the DOE to ensure energy security for the country, especially as the global economy reels from the energy crisis brought about by the conflict between Russia and Ukraine,” Cusi said.

“The keen interest of investors in Service Contract 38, notably from the Razon group, bolsters the position long asserted by the Department, that the Malampaya Service Contract remains to be economically viable, and presents an attractive investment opportunity for the upstream oil and gas industry,” he added.

The Malampaya deep-water gas project ushered the natural gas industry into the Philippines.

The gas-to-power project supports up to 20% of the country’s electricity requirements using indigenous resources of natural gas, the cleanest-burning hydrocarbon, and reduces the need for imported oil, according to Prime Infra.

The planned takeover of the Malampaya facility by Uy — a close associate and top campaign donor of outgoing President Rodrigo Duterte — is the subject of the graft complaint filed before the Office of the Ombudsman against Cusi, the Davao-based businessman, and officials of Chevron Philippines and Shell Philippines Exploration B.V.

Uy and Cusi even filed libel cases against journalists and media outlets, including GMA News Online, who reported about the filing of graft charges against them. —VBL, GMA News