It’s final: Davao-based tycoon Dennis Uy now holds the controlling stake in the country’s biggest natural gas venture off Palawan.
In a statement on Thursday, Shell Philippines Exploration B.V. announced it sold its 45% share in Service Contract (SC) 38 in Malampaya deep water gas-to-power to Uy’s Udenna Corp., which already owned a 45% stake in the project. The remaining 10% belonged to state-run Philippine National Oil Corp.
The transaction — valued at $380 million with additional payments of up to $80 million between 2022 and 2024 — will allow Uy to take over the project that had also captured the attention of other tycoons such as Ramon Ang of San Miguel Corp. and Manuel V. Pangilinan.
Both parties expect to complete the purchase by the end of the year. To note, the transaction does not need the approval of the Philippine Competition Commission after the so-called Bayanihan 2 law exempted mergers and acquisitions (M&As) worth below P50 billion from regulatory review.
“Today’s announcement is consistent with Shell’s efforts to shift our Upstream portfolio to one that is focused on nine core positions,” Wael Sawan, company upstream director, said.
If anything, the deal would further cement Uy’s status as a major player in the country’s energy sector. Apart from holding a majority share in Malampaya, he also owns Phoenix Petroleum Philippines, Inc., one of the country’s largest oil companies.
It was only over a year ago when antitrust regulators cleared Uy’s purchase of Chevron Malampaya LLC’s 45% share in the natural gas project, which accounts for 40% of Luzon’s annual energy requirements.
The gas project, operational since 2001, is seen for decommissioning between 2027 and 2029 after a projected decline in energy output starting 2024. Malampaya also generates revenues for both national and local governments in the form of royalties. Last year, the former’s share, which accounted for 60% of total, reached P26.57 billion.
When news about Shell’s plan to divest itself from SC38 broke, Uy immediately expressed interest to take control of the project, believing that Malampaya “is a high-quality asset, strategic to the future welfare and energy security of the country.”
Meanwhile, Shell said its exit from the project would have no impact on its local operations, adding that its staff in Malampaya will keep their jobs under the new ownership. “Shell will continue to pursue opportunities in the Philippines where it can leverage its global expertise in line with its strategy,” the company said.
Article by Philstar via Albert Rovic Tan / AdChoiceTV News