Shell Philippines Exploration B.V., the operator of Service Contract 38 off northwest Palawan, plans to divest its stake in the Malampaya natural gas project.
Spex, a member of the Shell Group, owns a 45-percent stake in the $4.5-billion Malampaya project, while Dennis Uy’s Udenna Corp. holds another 45 percent which it bought from Chevron Philippines LLC. State-owned PNOC Exploration Corp. has the remaining 10 percent.
“As part of an ongoing rationalization to simplify and increase the resilience of its business, Shell is exploring its options with a view to divest its interest in SC 38 [Malampaya],” Spex managing director and general manager Don Paulino said in a statement.
“Shell would ensure a smooth transition of the asset to a credible buyer who would be well-placed to optimize the value from Malampaya. The Philippines remains an important country for Shell after over a century of successful operations and Shell will continue to pursue opportunities where it can leverage its global expertise in line with its strategy,” Paulino said.
It would be the second major divestment of the Shell Group in the Philippines. Pilipinas Shell Petroleum Corp., the country’s second largest oil company, earlier shut down its 110,000-barrel refinery in Batangas province and converted it into an import terminal.
Spex has been asking the government to extend the service contract of the Malampaya gas project, which is set to expire by 2024, to allow the consortium to look for more gas supply opportunities.
Gas from the Malampaya field is expected to start to be depleted by 2024 but Spex officials earlier said it could still produce until 2027 to 2030.
The $4.5-billion Malampaya-gas-to-power project is the second biggest source of electric power in the Luzon and supplies fuel to five power plants in Luzon with combined installed capacity of 3,200 megawatts, representing about 21 percent of the national demand for electricity.
Senator Sherwin Gatchalian, chairman of the Senate committee on energy, earlier expressed concern over the imminent depletion of natural gas from the Malampaya field.
“We’re racing against time. If we fail to act now, we could be experiencing anew a debilitating rotational brownout by 2024 once our power supply from the Malampaya gas field is depleted,” Gatchalian said in a statement earlier.
Gatchalian said the absence of replacement fuel could threaten energy security and might lead to possible rotational brownouts. Gatchalian filed Senate Bill No. 1819 to provide a national energy policy and framework for the development and regulation of the Philippine midstream natural gas industry.