Udenna Corp., controlled by businessman Dennis Uy, said Monday it will exercise its right as a member of the Service Contract 38 consortium to acquire the 45-percent stake of Shell Philippines Exploration B.V. in the $4.5-billion Malampaya natural gas project.
“The Udenna Group firmly believes that Malampaya is a high-quality asset, strategic to the future welfare and energy security of the country and welcome our partner PNOC Exploration Corp. to join us in taking over the field on a 100-percent basis,” Udenna Group spokesperson Raymond Zorrilla said in a statement.
Energy Secretary Alfonso Cusi, who is also the chairman of PNOC, welcomed the offer of Udenna, but said the government would have to study the transaction first.
“We thank Udenna for their invitation. We need to do due diligence first before we can state our position,” Cusi said.
Zorrilla said Udenna was prepared to exercise its rights under SC 38 or the Malampaya gas-to-power project consortium. Udenna earlier bought the 45-percent stake of Chevron Corp. in the consortium.
“Should Shell not consider their existing partners but put forth a decision to sell its stake to another third party, Udenna will rely on its rights as stipulated in the agreement and as a member of the consortium, such as our pre-emptive and consent rights,” said Zorrilla.
Zorrilla said the company would exercise its pre-emptive right as “there might be offers from others.”
He said the partners in the consortium were free of any conflict of interest associated with ownership of the downstream gas and electricity businesses. He stressed the importance for Malampaya to operate independently for the benefit of the Filipinos.
Zorrilla said complicated issues might arise with a potential new consortium member which would take time to be evaluated. He said it might be difficult for anyone other than the present partners to assess the outcome of the issue in a timely manner.
Udenna has a 45-percent interest in SC 38, while PNOC-EC has 10 percent. Udenna acquired its stake from Chevron Malampaya LLC last year.
Zorrilla said the transfer of Spex’s interest in Malampaya should be resolved soon, with the remaining consortium members as the logical choice to acquire the Shell stake to ensure continued certainty to the local workforce, customers and stakeholders who rely on Malampaya’s safe and reliable operations in a manner which minimizes disruption.
“We are fortunate that the Malampaya workforce composed of Filipinos have had the benefit of years of training by Shell and are in fact the lifeblood of the project; and it is the remaining consortium members’ responsibility to ensure that they remain secure in the knowledge that their service to the country shall continue. The Malampaya facilities are run by Filipino men and women to produce energy safely and reliably to keep the lights on for every Filipino,” said Zorrilla.
He said Udenna was also privileged to have been able to work with Spex and PNOC-EC to forge a vision to discover and produce more indigenous resources beyond the term of the existing service contract.
“We are keen to pursue this vision even with Shell’s exit, and that we, together with PNOC-EC, are the most suitable party to assume Shell’s interest. We will exercise this right as provided in our joint venture agreement,” Zorrilla said.
Spex managing director and general manager Don Paulino earlier said that if the company would not find a suitable buyer, it would retain its investment in the Malampaya gas project.
Udenna Group said the exit of Spex from the Malampaya project would not impact operations. Udenna also expressed its trust and faith in the Filipino operating team which would continue operating the asset after any sale by Spex.
Udenna’s businesses include distribution and retail of finished petroleum products, shipping and logistics. The group expanded and diversified its portfolio to include property development, education, food, gaming and tourism, infrastructure and telecommunications.
It employs more than 9,000 personnel and is expected to create thousands more jobs for Filipinos over the coming years, according to Zorilla.