Solon to DOE: Ensure smooth Malampaya operator switch

A House lawmaker urged the Department of Energy (DOE) on Sunday to ensure the “seamless transfer” of Malampaya’s day-to-day gas business, amid calls for an inquiry into the $460-million operator switch from Shell Petroleum B.V. to Udenna Corporation.

“We are counting on a smooth handover with zero disruption to Malampaya’s vital gas operations that supply up to 20 percent of the country’s electricity demand and provide the government a 60 percent share in net revenues,” Surigao del Sur Rep. Jonny Pimentel, House good government and public accountability committee vice-chairperson, said in a statement on Sunday.

Pimentel’s remarks came after a second reelectionist senator pressed for an inquiry into Udenna subsidiary Malampaya Energy XP Pte Ltd’s acquisition of Shell’s operating stake in the offshore gas field.

As for the call for a probe, Pimentel warned against politicizing the issue, saying, “We’re not surprised at all by the political noise coming from senatorial candidates who might want to stir things up to put themselves in the limelight.”

Effective Jan. 1, 2022, Udenna will become Malampaya operator, following Shell’s decision to sell for $460 million its 100 percent stake in Shell Philippines Exploration B.V. (SPEX).

SPEX holds a 45 percent operating interest in Malampaya under Service Contract 38.

Pimentel welcomed the new operator’s decision to absorb all of SPEX’s officers and staff, thus assuring the operational reliability and safety of Malampaya’s gas business.

Sampaguita gas discovery

“Moving forward, we in the House of Representatives are now more interested in the country’s longer-term energy security, particularly the development of the larger Sampaguita gas discovery located 250 kilometers southwest of Malampaya,” Pimentel said.

Citing DOE records, Pimentel said Sampaguita’s operator is required to drill two offshore appraisal wells on or before Oct. 16, 2022, a deadline less than 11 months away.

“We want the operator to drill the commitment wells on schedule. We are hoping that Sampaguita can transition from exploration to production within this decade – just in time to replace Malampaya’s thinning reserves that are projected to last only until 2027 to 2029,” Pimentel added.

Publicly listed PXP Energy Corp., through Forum Energy Ltd, has a 70 percent operating interest in Service Contract 72, which includes the Sampaguita gas finding.

Sampaguita is projected to contain 2.6 trillion cubic feet of in-place gas and 5.5 trillion cubic feet of in-place prospective gas, according to an independent assessment by Weatherford Petroleum Consultants.

Another study estimates Sampaguita’s potential resources at 3.4 trillion cubic feet of gas and 440 million barrels of oil.

Udenna: Gov't not at losing end

Earlier, Davao-based tycoon Dennis Uy's conglomerate Udenna Corp. refuted claims that the government will be financially disadvantaged after it acquired controlling stakes in the Malampaya gas-to-power facility off Palawan.

“There’s a misunderstanding from certain sectors of the business community. Saying there’s a lot for the government to lose if the government does not participate,” Udenna president Raymundo Martin Escalona told reporters at a virtual press briefing last Thursday.

A graft complaint filed against Uy, Energy Secretary Alfonso Cusi, and several officials alleged that the government’s monetary losses from the Chevron sale to Udenna is estimated at P21 billion, based on the average 45% gross share of Chevron, as member of the Malampaya consortium, for the years 2018, 2019, and 2020. —LBG, GMA News