Udenna Corp. on Thursday called on energy stakeholders to respect the law and contract sanctity amid the controversy surrounding its acquisition of the shares held by Chevron Malampaya LLC and Shell Philippines Exploration B.V. stakes in the Malampaya natural gas project.
Udenna president Raymundo Martin Escalona said in a virtual briefing the company did not violate any law in acquiring the combined 90-percent stake in Service Contract 38.
“We strongly believe that there is a need to regard the rule of law and put importance on contract sanctity. This flippant attitude by some parties towards contract sanctity will further hurt any investment and exploration by international upstream companies in the Philippines,” Escalona said.
He assured the sale of the Chevron and Shell stake would not impact on the government share in SC 38.
Malampaya Energy XP Pte. Ltd., a unit of Udenna Corp., acquired the 45-percent stake each of both Chevron and Spex in SC 38. The remaining 10 percent is owned by state-run PNOC Exploration Corp.
The Chevron sale received approval from the Department of Energy but the Spex sale was still pending and awaiting the consent of PNOC-EC.
“Government will continue to receive 60 percent of the net proceeds without contributing to the costs of operating the facilities. The joint venture partners get 40 percent of the net proceeds while shouldering 100 percent of the costs which is about $150 to $160 million annually,” Escalona said.
Several groups questioned the technical, legal and financial capacity of the Udenna, led by businessman Dennis Uy, to acquire the Malampaya project but Escalona said the same highly knowledgeable and experienced staff, who were with Chevron and Shell for more than 20 years, would continue to deliver safe and reliable supply from Malampaya.
“These expert teams are now supported by a parent company that has committed to invest in an urgently needed rejuvenation program to stem the decline at Malampaya. This is critical to drive future growth and ensure energy security for the Philippines,” he said.
Udenna is also preparing for drilling options to look for more gas as the Malampaya nears depletion. The Malampaya consortium has a pending application for contract extension with the Department of Energy.
“The operator SPEX based on a proposal approved by all members of the SC 38 consortium have submitted a proposal to DOE and discussions are ongoing,” he said.
“The joint venture is currently looking at a holistic strategy for the entire service contract area. The discussion in the joint venture is ongoing,” Escalona said.
He said Malampaya Energy has long-term energy aspirations that include rejuvenating existing facilities of Malampaya to mitigate the decline, increasing recovery from the Malampaya production area and proving economic volumes in other prospects within the SC 38 area.
“A timely decision on the license extension is an enabler for these long-term opportunities. At the end of the day is it worth it? Yes, it is very much worth it. For the first time after three decades, Malampaya will be managed by Filipinos, for Filipinos, fully focused on national priorities,” he said.