State-run PNOC Exploration Corp. said Wednesday it withheld its consent on the sale of the 45-percent stake of Shell Philippines Exploration B.V. in the Malampaya deepwater gas-to-power project to the Udenna Group.
PNOC EC, subsidiary of Philippine National Oil Co., owns a 10-percent stake in Service Contract 38 or the Malampaya gas project in northwest Palawan.
“We communicated to the operator [Spex] about us withholding our consent, so right now it depends on the operator how the operator will act, after we withheld our consent,” PNOC EC president and chief executive Rozzano Briguez told Senator Sherwin Gatchalian during a Senate hearing.
Shell Petroleum N.V. signed in May this year an agreement with Malampaya Energy XP Pte Ltd., a subsidiary of Udenna, to sell its entire shareholdings in Spex.
The Udenna Group already owns a 45-percent stake in Malampaya, after acquiring the holdings of Chevron Malampaya LLC.
The Shell Group agreed to sell its 45 percent in the Malampaya gas project to the camp of businessman Dennis Uy, chairman of Udenna Group, for $460 million.
Spex, operator of SC 38, then sought the consent of its joint venture partner PNOC EC, which has the right of first refusal.
Gatchalian, chairman of the Senate energy committee, asked whether PNOC EC was no longer giving its consent to the deal. Briguez replied, “Yes, that is correct.”
“Mr. chairman, right now, I think we are still into the process wherein the operator of the SC that is Spex might communicate to us and ask clarification on it or maybe ask clarification on our not giving consent or withholding of consent. That is where we are now,” Briguez said.
Energy Secretary Alfonso Cusi said the department was monitoring developments in the transaction.
“What are we going to evaluate if there is no consent by the parties. We will await for that,” Energy Cusi said, when asked by Gatchalian on whether the department would continue its evaluation of the Spex sale.
PNOC EC informed Spex on Monday, but begged off against informing the Senate hearing of the basis of its decision until it was able to inform its partner and stakeholders.
“We only gave the consent to the operator two days ago and out of respect to other parties, not to disclose because our partner and stockholders have to be informed first,” Briguez said.
Gatchalian agreed, saying an executive session could be held to discuss the issue.
“In spirit of transparency and educate us, we will request from you a comprehensive briefing later on,” the Senate committee on energy chairman said.
Spex managing director Kiril Caral said the company could not move forward with the sale without the consent.
“Without the consent of PNOC EC, we will not be able to proceed with the completion at the moment,” Caral said, confirming it received the PNOC EC letter “notifying their decision through their board not to consent to the transaction.”
“They did not explain the reasons. We very much are interested to understand the reasons for the decision at the appropriate time, as I understand come January,” he said.
He said Spex was “very disappointed with the outcome of the decision of PNOC EC.”
“However we continue to engage to find out if there is anything we can do to address the concerns that might have led to this decision,” said Caral.
He said both parties would need to meet and discuss to understand the PNOC decision.
“I would not go beyond that at this point until we have a clear picture of the reasons behind of the action taken by the board of PNOC EC,” he said.
PNOC EC earlier it has stringent control measures and systems in place to make certain that the company would come up with a sound business decision particularly on the transaction.