DOE reviewing Udenna’s deal to buy Chevron’s Malampaya stake

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Credit: Read the original article from Manila Standard Business.

The Department of Energy is evaluating the transfer of the 45-percent stake of Chevron Malampaya LLC in the $4.5-billion Malampaya gas project in northwest Palawan to Udenna Corp. to determine if it complied with technical, legal and financial requirements, an official said Tuesday.Energy Assistant Secretary Leonido Pulido III said during a Senate energy committee hearing the transfer of the participating interest of Chevron Malampalaya to Udenna subsidiary UC Malampaya Philippines Pte. Ltd. needed the agency’s approval.Pulido said the transaction was covered by Department Circular 2007-04-003 “prescribing the guidelines and procedures for the transfer of rights and obligations in the petroleum service contracts under Presidential Decree 87.”He said the circular provides the guidelines where the DOE will evaluate the technical, legal and financial capacity of the companies involved.Pulido said DOE was informed of the completion of the transfer of shares in March.“March to August, the DOE legal department had to determine whether such transfer had to fall within the department circular that would require the DOE approval of the transfer and our legal services held that that falls squarely in that department circular and that should require an evaluation of the technical, legal and financial capacity of the transferee so that the DOE may approve such transfer,” he said.Pulido said a legal argument was raised that Udenna’s purchase of Chevron constituted no change in the corporate personality of the consortium, because the Dennis Uy-led company purchased the whole shares of Chevron in Malampaya.

“However, after discussion, we felt that it still falls within the decision within the mandate of the circular and PD 87,” he said.Pulido said DOE was evaluating the request of Udenna for the transfer of share ownership, which was submitted by Malampaya operator Shell Philippines Exploration B.V. in October.Senators also raised concern over the technical capability of Udenna during the hearing, as Udenna had no previous experience in oil and gas exploration and expressed interest to acquire the 45-percent stake of Spex in the Malampaya project.Senate energy committee chairman Sherwin Gatchalian, one of the proponents of the resolution of Service Contract 38 or the Malampaya gas project, conducted an inquiry in aid of legislation into the acquisition.Gatchalian said there was a need to look into the energy security of the country in anticipation of the expiration of the Malampaya natural gas field in 2024 and the eventual depletion of supply of the Malampaya gas field between 2027 and 2029.

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