Razon's firm acquiring Malampaya operator from Dennis Uy

Ports and casino tycoon Enrique Razon Jr.'s plan to take over control of the Malampaya gas-to-power project is now taking shape after his company acquired Davao-based tycoon Dennis Uy's Malampaya Energy XP Pte. Ltd.

In a statement on Friday, Razon’s Prime Infrastructure Capital Inc. (Prime Infra) said its unit Prime Exploration Pte. Ltd. signed a share purchase agreement acquiring Malampaya Energy from Uy's Udenna Corp.

In May 2021, Dutch petroleum giant Shell Petroleum N. V. disclosed that it 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.

Should the transaction push through, Uy's group is supposed to hold 90% control of the gas field in offshore Palawan after it already bought out Chevron Philippines' share in the Malampaya Consortium — through UC Malampaya — in 2020, which had 45% participating interest in SC 38. 

The Philippine National Oil Company Exploration Corporation (PNOC-EC), however, withheld its consent for the divestment of SPEX's shares in the Malampaya gas field to Uy's group, thereby delaying its gain of 90% control of the gas field. 

Prior to Uy's planned takeover, the Malampaya Consortium was composed of SPEX, Chevron, and the PNOC-EC, which still holds 10% interest in the gas field.

Early in June, Prime Infra announced that is acquiring a controlling stake in the Malampaya gas-to-power project from Uy, saying that "the acquisition process has kicked off and will close subject to the consent of various parties including the Department of Energy (DOE) and the PNOC-EC." 

Prime Infra reiterated that "the change in control of SPEX from Shell to Prime Infra is subject to the consent of PNOC EC and the Department of Energy."

"Once such consents are given and the transition process for a safe and seamless handover of operations is completed, Prime Infra will assume full ownership and control of SPEX," it said.

The company said Malampaya project is one of the country's most important power assets, as it produces natural gas-to-power plants in Batangas City that account for around 20% of the Philippines' total electricity requirements.

The gas-to-power project began operations in 2001. The license for the SC 38 is set to expire in 2024.

With his planned takeover of the Malampaya gas field, Razon expressed intent to seek extension of the consortium's license.

"We believe that gas is an important transition fuel in the near-term, reducing the need for baseload fossil fuels like coal. Hence, we intend to accelerate investments on the Malampaya gas field to improve the output of existing wells and, if possible, develop new wells in the area once the license extension is secured from the government," he said.

"Prime Infra's acquisition of Malampaya Energy reflects our shared commitment with the national government to help maintain energy security and independence as we transition to a renewable energy-fueled Philippine economy," Razon added.

For his part, Uy said that Udenna is looking "forward to this opportunity to partner with Prime Infrastructure and PNOC-EC, as we explore more ways to fulfill our common vision to make Malampaya continue to operate safely and reliably to strongly support our country's need for indigenous and sustainable energy for many years to come."

Prime Infra said its investment in the expansion of Malampaya operations will also be critical to provide the necessary infrastructure that would support the development of natural gas in the area, one of the key points defined in the administration’s energy agenda.

Prime Infra said that it is working with Shell and Udenna to achieve a smooth transition of SPEX to Prime Infra.   —KBK, GMA News