Lotilla: PNOC-EC's review of Razon's Malampaya purchase 'on track'

Energy Secretary Raphael Lotilla on Wednesday said the Philippine National Oil Company Exploration Corp.’s (PNOC-EC) review of Razon-led Prime Infrastructure’s planned purchase of an operating stake in the Malampaya natural gas-to-power project is on track.

“Just to assure you that the review by the PNOC-Exploration Corporation on Prime Infra’s acquisition is on track and the notification to the DOE, having been received,” Lotilla said at a virtual press conference.

He said the DOE's review of the transaction is "also moving in parallel."

Last week, Lotilla said 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.

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

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 department's prior approval.

Meanwhile, it is a requirement to secure consent of the state-run PNOC-EC — which holds 10% stake in the Malampaya project — for divestment of interests of consortium partners in the natural gas field venture under the Joint Operating Agreement in the Service Contract No. 38.

The Malampaya Consortium was composed of Shell Philippines Exploration B.V. (SPEX), Chevron Philippines, and PNOC-EC before Davao-based tycoon Dennis Uy bought out Chevron’s 45% participating stake in SC 38 and signed a share purchase deal with Shell Petroleum N.V. to acquire SPEX, which holds 45% operating stake in the gas field project.

However, the transaction did not push through when the 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.

Razon’s Prime Infra’s Prime Exploration Pte. Ltd., on the other hand, signed a share purchase agreement acquiring Malampaya Energy from Uy's Udenna Corp.

“Definitely, since we know that the present Malampaya-Camago field is a finite one, the resolution of the sale, the resolution of the legal, technical and financial issues regarding the sale of SPEX interest is important to the energy security of the country,” Lotilla said.

Review committees formed

With this, the Energy chief announced the creation of special technical and financial review committees and consultants who will assist the DOE in reviewing the proposed sale of Shell’s interest as operator of Service Contract 38 or the Malampaya natural gas to power project.

“The Technical Review Committee will be chaired by Mr. Rufino B. Bomasang. Its members include Mr. Francisco G. Delfin, Jr. and Mr. Froilan A. Tampinco, while Mr. Edgar Benedict C. Cutiongco will serve as a consultant,” he said.

“The Financial Review Committee will be chaired by Mr. Roberto G. Manabat. Its members include Mr. J. Carlitos G. Cruz and Mr. Gabriel R. Singson, Jr. Atty. Ephyro Luis B. Amatong will serve as a consultant,” he added.

Meanwhile, for the legal aspect, Atty. Luis Ma. G. Uranza will serve as a consultant, he said.

“In availing of the expertise of these individuals, we want to assure the public that the DOE will exercise the utmost care and diligence, in carrying out its mandate involving the country's upstream oil and gas sector in general, including the country's biggest gas-to-power initiative to date—the Malampaya-Camago project,” Lotilla said.

“These advisers are highly regarded in their fields of expertise. Above all, they have the highest moral standards that are essential in guiding and protecting the interest of the government and of the Filipino people.”

Bomasang was the former president and CEO of the PNOC-EC.

Delfin, meanwhile, served as DOE Undersecretary while Tampinco served as National Power Corp. president and Power Sector Assets and Liabilities Management Corp. vice-president.

Cutiongco, on the other hand, is the current president of the Philippine Petroleum Association of the Upstream Industry and a Senior Lecturer at the University of the Philippines National Institute of Geological Sciences.

Manabat is the founding and former chairman and CEO of KPMG R.G. Manabat & Co., a member firm of KPMG International. Manabat was also the former senior partner of SGV & Co. and served as an independent director of several private companies.

Cruz, likewise, was the former chairman and managing partner of SGV & Co and is currently a Trustee of the Makati Business Club.

Singson, on the other hand, was a former undersecretary of the Department of Finance (DOF).

Amatong served as a Commissioner of the Securities and Exchange Commission (SEC) and likewise served the DOF as assistant secretary.

Uranza, who will serve as a legal consultant, is an expert in corporate law and financial rehabilitation, criminal, civil, and commercial law. He served as a director of PNOC-EC.

"This pool of advisers is expected to assist the DOE in ensuring that its decisions on matters relating to the Malampaya Service Contract consider all the relevant factors and are founded on sound technical analyses," 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. —KBK, GMA News