Solon hits proposed probe on transfer of Malampaya to Uy’s Udenna Corp.

Malampaya Energy ramps up exploration and production

The Malampaya Deep Water Gas-to-Power Project is located 50 kilometers offshore Northwest Palawan. It is the only natural gas-producing asset in the Philippines.

MANILA, Philippines — What the government needs to ensure right now is a smooth transfer in the operation of the Malampaya gas field and not investigations as senatorial candidates have suggested, a lawmaker from the House of Representatives said.

According to House committee on good government and public accountability chair and Surigao del Sur Rep. Johnny Pimentel, the smooth handover of Malampaya — from Shell Exploration Philippines B.V. to Udenna Corporation’s UC Malampaya — should be facilitated to prevent power woes.

Pimentel reasoned that the operations of Malampaya, which supplies most of the country’s natural gas and accounts for at least 20 percent of the country’s power requirements, should not be disrupted.

“We are counting on a smooth handover with zero disruption to Malampaya’s vital gas operations that supply up to 20 percent of the country’s electricity demand and provide the government a 60 percent share in net revenues,” Pimentel said in a statement.

The lawmaker also reiterated that the senatorial aspirants pushing for an investigation on the transfer of the Malampaya gas field’s operation are only looking to stir things up and get exposure for the 2022 national elections.

Pimentel did not name anyone, but his remarks came after a sitting senator seeking reelection asked for an inquiry into the Udenna subsidiary’s acquisition of Shell’s operating stake in the offshore gas field, which accounts to 45 percent.

By January 1, 2022, Udenna will have acquired both Shell BV and Chevron’s stake in Malampaya — each equating to 45 percent — effectively controlling the gas field.

“We’re not surprised at all by the political noise coming from senatorial candidates who might want to stir things up to put themselves in the limelight.”

According to Pimentel, the noise seems to come from senatorial candidates in the lower spectrum, as the top six aspirants in the surveys are supposedly assured of Senate seats already.

“If we look at the race for the 12 Senate seats, the fight is really for the last six seats. The candidates who are ranked No. 7 to No. 15 in the surveys are the ones under pressure to target everything under the sun for them to stand out,” he claimed.

“As we can all see, those in the top six in the senatorial surveys are fairly quiet, because they are already assured of winning. They are not going overboard to advertise themselves,” he added.

Last Friday, Senator Risa Hontiveros, who is seeking her second term in the 2022 polls, asked Senator Richard Gordon, who heads the Senate blue ribbon committee, to probe Udenna’s acquisition of Malampaya.

Davao-based businessman Dennis Uy, Udenna Corporation’s chief executive officer, was a major contributor to the 2016 campaign of President Rodrigo Duterte. Just this October, complaints were filed against Uy and other Department of Energy officials including Secretary Alfonso Cusi for allegedly conspiring to provide Udenna a majority stake at Malampaya.

New natural gas resource

But aside from focusing solely on Malampaya, Pimentel urged the government to develop the Sampaguita gas field, another offshore natural gas source in the West Philippine Sea, near Recto Bank.

Developing the Sampaguita field would provide the country secure energy sources as it would not be reliant on just one project, Pimentel claimed.

“Moving forward, we in the House are now more interested in the country’s longer-term energy security, particularly the development of the larger Sampaguita gas discovery located 250 kilometers southwest of Malampaya,” he said.

“We want the operator to drill the commitment wells on schedule. We are hoping that Sampaguita can transition from exploration to production within this decade – just in time to replace Malampaya’s thinning reserves that are projected to last only until 2027 to 2029,” he added.

According to Pimentel, publicly listed PXP Energy Corp., through Forum Energy Ltd, currently has a 70 percent operating interest in Service Contract 72 which includes the Sampaguita gas finding.

The said field is expected to contain 2.6 trillion cubic feet of in-place gas and 5.5 trillion cubic feet of in-place prospective gas, an independent assessment cited by Pimentel said.  Another study he quoted said that Sampaguita’s potential resources are around 3.4 trillion cubic feet of gas and 440 million barrels of oil.

This would be around the same amount of gas sourced from Malampaya, which has a 2.7 trillion cubic feet proven reserves of natural gas according to the Department of Energy.

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