The newly-appointed executives of state-run PNOC Exploration Corp. will conduct a due diligence on the sale of Shell Exploration Philippines B.V.’s 45-percent stake in the Malampaya deep water gas-to-power project to MEXP Holding Pte. Ltd., which is now controlled by the Razon Group.
PNOC EC, representing the government, owns a 10-percent stake in Service Contract 38 in northwest Palawan.
The previous PNOC-EC board decided to withhold its consent to the sale amid questions on the legal, financial and technical capability of the Udenna Group to operate Malampaya. However, the ownership of MEXP Holdings recently changed from Udenna Group of businessman Dennis Uy to Prime Infrastructure Capital Inc. of businessman Enrique Razon Jr.
Energy Secretary Raphael Lotilla said he would review the sale from the Department of Energy standpoint and not as PNOC EC chairman.
“It would not be good for me to be participating in the deliberations of PNOC EC on this and then reviewing myself later on,” Lotilla said in a briefing.
“I would have to get PNOC EC to address these issues, and President [Franz] Alvarez is heading this particular effort right now, and they would have to address these issues with the PNOC EC board soon because there are certain timelines that have to be met,” Lotilla said.
He said the DOE wanted to make sure the PNOC EC board would have a complement of professional and competent advisors or consultants “that would help them evaluate what is before them.”
“I also have great confidence in our career people in PNOC EC that, together with the consultants, would be able to assist the board and president Alvarez in making sure that the necessary due diligence is carried out and, then it would go to the DOE,” Lotilla said.
Prime Exploration Pte. Ltd., a subsidiary of Prime Infra, announced last month that it formally acquired the 45-percent stake owned by a unit of Udenna in the Malampaya gas project.
Prime Exploration signed a share purchase agreement to purchase MEXP Holdings from Udenna.
The parties earlier said that while there was a change of ownership from Udenna to Prime Infra, the terms and conditions under which Shell sold SPEX to MEXP had not changed.
Prime Infra, Spex and Udenna said they were working together to transition SPEX into Prime Infra smoothly.
Shell said it discussed with MEXP and Prime Infra on how to ensure the change of ownership would not unduly disrupt the transition process and continue working with PNOC EC and DOE to complete the deal by the fourth quarter.
The change in control of SPEX from Shell to Prime Infra is subject to the consent of PNOC EC and the DOE.
Once the consent is 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.
The Malampaya project is one of the country’s most important power assets. It produces natural gas for power plants in Batangas City, accounting for around 20 percent of the Philippines’ total electricity requirements. It began operations in 2001, with the consortium’s license for the project set to expire in 2024.
Prime Infra vowed to accelerate investments in the Malampaya gas field to improve the output of existing wells and, if possible, develop new wells in the area once it secures SC 38 license extension from the government.
The other member of the SC 38 consortium is UC38 LLC, another subsidiary of Udenna.