Udenna says Malampaya takeover 'above board'

Davao-based tycoon Dennis Uy's conglomerate Udenna Corporation defended its takeover of the Malampaya gas-to-power facility, saying its acquisition of majority stakes in the offshore Palawan project is above board.

“Let us be clear that there is no law requiring approval of transfer of shares of companies that have interest in Malampaya,” Udenna spokesperson Atty. Raymond Zorilla said in a statement.

“Therefore, no party has the legal ability to rescind the Chevron and Shell transactions.”

Zorilla said the company is “well aware” of the allegations and supposed false narratives flooding the media and even in private groups on social media.

Graft complaint

Uy’s planned takeover of the Malampaya facility is the subject of the graft complaint filed before the Office of the Ombudsman against Energy Secretary Alfonso Cusi, the Davao-based businessman, and officials of Chevron Philippines and Shell Philippines Exploration B.V. 

Uy is a major contributor in President Rodrigo Duterte’s presidential bid in 2016.

In May, Dutch petroleum giant Shell disclosed that it signed a share purchase agreement with Uy’s Malampaya Energy for the sale of its 100% shareholding in Shell Philippines Exploration B.V. (SPEX), which holds a 45% operating interest in Service Contract 38 or the Malampaya gas field.

With the sale of Shell’s Malampaya stake to Malampaya Energy, Uy’s conglomerate will now hold 90% control of the gas field in offshore Palawan.

The Davao businessman’s group has already bought out Chevron Philippines’ share in the Malampaya Consortium last year, which had 45% participating interest in Service Contract 38 or Malampaya gas field.

Before Uy's planned takeover, the Malampaya Consortium was composed of SPEX, Chevron, and the Philippine National Oil Company-Exploration Corporation, which still holds 10% interest in the gas field.

“The transfers of Chevron and Shell shares underwent strict bidding processes and due diligence by both multinational oil and gas players,” Zorilla said.

“The share sales were above board and legal and had to pass thorough scrutiny by Philippine regulators, international lenders, and the said private multinationals involved.”

“We, in Udenna, believe that UC Malampaya Philippines Pte Ltd, is qualified to be the shareholder of the Chevron company, and in the future, to become the shareholder of the existing operator via Malampaya Energy XP,” he said.

The Udenna spokesman said the conglomerate was awarded the contracts “because of the depth of our understanding of the business — how it should be managed and how it can be rejuvenated.”

“Furthermore, the very same experts who have dedicated their knowledge and expertise and have been with Chevron and Shell for more than 20 years are very much the same experts in the current management and operations of Malampaya,” Zorilla said.

Fabrications

On the issue of investment and revenue, the Udenna spokesman said the numbers quoted in various statements and reports regarding what the government will be ceding are mere fabrications.

The graft complaint against Uy, Cusi, and several official alleged that the government’s monetary losses from the Chevron sale to Udenna is estimated at P21 billion, based on the average 45% gross share of Chevron, as member of the Malampaya consortium, for the years 2018, 2019, and 2020.

The complainants also said gross monetary losses could double to P42 billion a year if combined with Udenna's deal with Shell Philippines Exploration B.V., which also holds 45% in the Malampaya project.

Zorilla, however, said that any government agency purchasing the Shell and Chevron shares has to first pay these international oil majors P50 Billion to purchase offshore companies.

“Recovery of this government money is high risk given Malampaya is a rapidly declining field with late life engineering and quality challenges,” he said.

“What we aim to focus and work on with the PNOC-EC will be the most pressing issue of rejuvenating Malampaya,” he added.

Zorilla decried that Malampaya has been made into a political battlefield.

Senator Sherwin Gatchalian, who conducted three hearings on the transaction, described it as "lutong makaw," a Filipino idiom which means a decision has been rigged or pre-arranged.  —KBK, GMA News