Malampaya Energy XP Pte. Ltd., a unit of Udenna Corp., expects to complete the acquisition of the 45-percent interest of Shell Philippines Exploration B.V. in the Malampaya gas-to-power project in northwest Palawan late this year, a top executive said Wednesday.
Malampaya Energy chief executive Raouf Kizilbash said during a Senate energy committee hearing the company was hoping to get the consent of joint venture partner PNOC Exploration Corp. on the transaction and the Department of Energy.
“We are looking at DOE and... getting PNOC’s consent when DOE starts its financial evaluation,” Kizilbash said.
“The target date when the new shareholder would start making decisions for that business...would be end November or December 1st. That’s the target,” he said when asked by Senator Sherwin Gatchalian.
Gatchalian wanted the Udenna Group to show its financial and technical competence in taking over as operator of the Malampaya project.
Shell Petroleum N.V. signed an agreement with Malampaya Energy in May to sell its 100-percent shareholding in Spex, which holds a 45-percent operating interest in SC 38 for up to $460 million.
Kizilbash said the Udenna Group was prepared to support the expansion of the Malampaya project.
He said the group retained $100 million as investment after it acquired the 45-percent stake of Chevron Malampaya LLC and another $100 million would be invested in the Spex transaction.
“What we have provided is about US$100 million. We’ve retained in the Chevron companies between UC 38 and Singapore companies, UC Malampaya. In addition, when we take over the Shell business, there will be cash in that company as well as about US$100 million. There will be about $200 million that can be used for exploration and growth,” Kilibash said. Alena Mae S. Flores
“I believe when DOE and PNOC EC will review the finances, they will see the robustness of it, the abundance of cash,” he said.
Energy Secretary Alfonso Cusi said they were still waiting for PNOC-EC to exercise its right to match the offer of Malampaya Energy before it could proceed with the review.
UC38 LLC, a subsidiary of Udenna, owns 45 percent of the Malampaya project through its acquisition of the Chevron stake while PNOC EC owns the remaining 10-percent stake.
“We are waiting for that. If they don’t match it and endorse the purchase, that is the time it will go to DOE,” Cusi said.
PNOC EC president Rozzano Briguez said they already waived their right to match the offer of Malampaya Energy but had not yet given its consent to the sale.
Briguez said they did not pursue the right to match because the acquisition would result in Spex becoming a government-owned and controlled corporation and would thus face operational flexibility issues.
“The hardest of that is losing operational flexibility if it becomes a GOCC and the second hardest is the financial availability. If no government banks will lend to us the specific amount, it will compromise the other projects that we have. So we recommended that we will not exercise our right to march,” he said.
Briguez said PNOC EC was conducting due diligence prior to giving its consent to the sale as Udenna would become the operator of the project.