The Department of Energy should justify its decision approving the transfer of Chevron Philippines’ ownership in Chevron Malampaya LCC to UC Malampaya Philippines, Sen. Win Gatchalian said Friday.
Gatchalian said no less than the DOE’s legal department, in a Senate hearing last November 10, 2020, told the Committee on Energy which he chairs that such a transaction is governed by a DOE circular requiring an evaluation of the technical, legal, and financial capacity of the company.
Presidential Decree 87 also requires the approval of the DOE on such transfer of shares in upstream petroleum ventures.
Also, in the joint operating agreement signed by the members of the consortium operating Malampaya (Shell, Chevron, and PNOC-EC), a provision exists that for the sale of shares to be finalized, the party or the transferer must ensure they get all prior permits or approvals from the government.
UC Malampaya Philippines completed on March 11, 2020 its acquisition of Chevron Malampaya LLC, the holder of a 45% interest in Malampaya gas field project, and it was only in October 28 last year that the DOE has been officially provided with the documents on the Malampaya share’s divestment, the senator noted.
Before the DOE announced its approval of the sale, Gatchalian note the Senate Energy Committee sought the department’s submission of its legal basis in reviewing the transaction, whether there is a need for another issuance to clarify if these kinds of transactions would need executive approval or not, and their recommendations to the legislature on possible amendments on PD 87.
“It bears stressing the need for an explanation from the DOE’s end on how they could justify their approval of the transaction. This involves not just an ordinary asset. It demands a lot of experience, technology, and global connections. The oil and gas industry is a global business,’ he said.
“The technical know-how is also required, and this is because we’re looking at the larger picture which is the energy security of the country. The consumers are the primordial concern. We want to make sure that the consumers will receive 24/7 electricity at a least cost manner,”” Gatchalian said.
“We have laws and regulations that govern all of these transactions, and those laws are meant to create a stable environment in the power sector,” he added.