DOE: Fate of Razon's Malampaya takeover decided within 2022

The approval of Enrique Razon Jr.'s planned takeover of the control of the Malampaya gas-to-power project will be decided by the Department of Energy (DOE) within the year, Energy Secretary Raphael Perpetuo Lotilla said Thursday.

“I don’t think that it would go beyond this year,” Lotilla said at a virtual press briefing when asked about the DOE's decision on whether or not to approve.

The DOE’s Department Circular No. 2007-04-0003 provides that the rights and obligations in petroleum service contracts shall not be assigned or transferred without the prior approval of the energy department.

Razon’s Prime Infrastructure Capital Inc. in late July announced that its Prime Exploration Pte. Ltd. signed a share purchase agreement acquiring Malampaya Energy from Davao-based tycoon Dennis Uy's Udenna Corp. 

Uy’s Malampaya Energy in May 2021 signed a share purchase deal with Shell Petroleum N.V. to acquire Shell Philippines Exploration B.V. (SPEX), which holds a 45% operating interest in Service Contract 38 or the Malampaya gas field.

However, the transaction did not push through when the Philippine National Oil Company Exploration Corporation (PNOC-EC) withheld its consent for the divestment of SPEX's shares in the Malampaya gas field to Malampaya Energy, thereby delaying Uy’s gain of 90% control of the SC 38.

Uy’s group also bought out Chevron Philippines' share in the Malampaya Consortium — through UC Malampaya — in 2020, which had 45% participating interest in SC 38.

Prior to Uy’s planned takeover, the Malampaya Consortium was composed of SPEX, Chevron, and the PNOC-EC, which still holds 10% interest in the gas field.

Prime Infra earlier said that the “change in control of SPEX from Shell to Prime Infra is subject to the consent of PNOC EC and the Department of Energy."

"Once such consents are given and the transition process for a safe and seamless handover of operations is completed, Prime Infra will assume full ownership and control of SPEX," Prime Infra said.

Lotilla said that the “PNOC-EC is considering the matter of giving its consent to the sale of Shell interest.”

“And as far as the DOE is concerned, we would have to review the sale and the terms and conditions under which it is going to be made,” Lotilla said.

“Probably next week, I will be announcing to you the technical and financial advisors that will assist the Department of Energy in reviewing the technical and financial aspects of the proposed sale,” he added.

Lotilla has also expressed openness to look into the possibility of extending the license for SC 38 or the Malampaya gas-to-power project. 

The license for the SC 38 is set to expire in 2024.

Razon’s firm has expressed intent to seek an extension of the Malampaya consortium license.

“I want to assure you and the public that DOE will exercise the utmost care and diligence in reviewing this proposal. The main objective is to ensure that the Philippine government and the Filipino people will take full advantage of this resource,” Lotilla said.

Malampaya project is one of the country's most important power assets, as it produces natural gas-to-power plants in Batangas City that account for around 20% of the Philippines' total electricity requirements.

The gas-to-power project began operations in 2001. —NB, GMA News