In approving Malampaya deal, DOE cites Prime Infra commitment to expand, develop nearby gas fields

The Department of Energy (DOE) on Wednesday cited Razon-led Prime Infrastructure Capital Inc.’s commitment to expand gas production and possibly develop other nearby resources when it approved the acquisition of a 45% interest of Shell Philippines Exploration BV (SPEX) in the Malampaya Service Contract 38.
 
“The approval by the DOE of the sale of Shell ‘s interest in SC38 of Malampaya was premised also on the commitment of the new entrant to maximize the development of the existing resources in the Malampaya Camago reservoir with a view to developing the nearby fields as well,” Energy Secretary Raphael Lotilla said at a virtual press conference.
 
On October 3, the DOE announced it had approved Prime Infra’s acquisition of SPEX after a “thorough review,” with the approval conditioned on SPEX remaining as a subsidiary of Prime Infra. 
 
The department found Prime Infra to be technically, financially, and legally qualified as a transferee and as a successor to Shell as operator of the Malampaya natural gas project.
 
“The new entrant is committed to maximizing the utilization of the remaining natural gas in the Malampaya-Camago reservoir with a view to developing nearby gas fields,” Lotilla said.
 
“I am confident that this trend will continue as we reaffirm to prospective investors the openness of our economy to foreign and local investors and we assure them of the continued stability of our legal framework especially in the upstream oil and gas sector,” the Energy chief said.
 
Prime Infra in July announced that its unit Prime Exploration Pte. Ltd. signed a share purchase agreement acquiring Malampaya Energy from Davao-based Dennis Uy’s Udenna Corp.
 
To recall, Uy’s Malampaya Energy inked a share purchase deal with Shell Petroleum N.V. to acquire SPEX in May 2021, but this did not push through after the Philippine National Oil Company Exploration (PNOC-EC) withdrew its consent.
 
Uy’s group had also acquired the 45% share of Chevron Philippines in the Malampaya Consortium—through UC Malampaya—in 2020.
 
Prime Infra said it is set to assume full ownership and control of SPEX by November 1, 2022, with a commitment to ensure continuity of production as long as the reserves support it.

The Malampaya gas-to-power project is one of the country's most important power assets, producing natural gas that fires up power plants in Batangas City that provide up to 20% of Luzon’s total electricity requirements.
 
Prime Infra has vowed to “contribute by doing all that it can to produce as much gas as possible to sustain production in support of the power demand in Luzon.”

Lotilla also said that “the state policy enunciated in PD (Presidential Decree) 87 is to "hasten the discovery and production of indigenous petroleum through the utilization of government and/or private resources, local and foreign, to yield the maximum benefit to the Filipino people and to assure just returns to participating private enterprises, particularly those that will provide the necessary services, financing, and technology and fully assume all exploration risks’.”
 
The acquisition of SPEX by Prime Infra also secured the consent of the Malampaya consortium and PNOC Exploration Corp.

Prior to Uy’s acquisition of Chevron’s participating stake and Razon’s buyout of SPEX, the Malampaya Consortium was composed of SPEX, Chevron, and the PNOC-EC—which still holds a 10% interest in the gas field.
 
“Prime Infra’s energy portfolio has always been aligned with the national government’s objective towards attaining energy independence and security, while reducing the country’s reliance on fossil fuels,” said Prime Infra president and CEO Guillaume Lucci. — VBL, GMA News