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Udenna assures it has funds to operate Malampaya

Danessa Rivera (The Philippine Star) - July 20, 2021 - 12:00am

MANILA, Philippines — Malampaya Energy XP Pte Ltd, a unit of Udenna Corp. of businessman Dennis Uy, has assured it has available funds to operate the Malampaya deep water gas-to-power project, with plans to drill a well to extend the life of the country’s only gas resource.

Malampaya Energy said its acquisition of the 45 percent stake of Royal Dutch Shell in the Malampaya project is supported by international reputable financial institutions which saw its capability to meet its obligations and to deliver value.

“The acquisition of SPEX is 100 percent underwritten and funded via bank loans from our existing lenders. These full facility agreements have been provided to the relevant decision makers. In addition, upon SPEX share sale completion, Malampaya Energy will have over P10 billion of cash,” it said.

This comes after the Senate Committee on Energy questioned, in a hearing last week, the takeover of the gas field by the Malampaya Energy, which only had a capitalization of $100 and was found to be severely deficient.

Malampaya Energy said the capitalization of the company is only one element of a capital structure and is not on its own a reflection of the company’s ability to fund the deals.

“The Energy committee has unfortunately looked at a very thin slice of information and it is Malampaya Energy’s responsibility to work with (the Department of Energy) DOE and (Philippine National Oil Company Exploration Corp.) PNOC-EC to ensure all the facts are properly presented and the financing certainty and significant cash is known,” it said.

Last month, Shell Petroleum N.V. signed a sale and purchase agreement with Malampaya Energy for the sale of its 100 percent stake in Shell Philippines Exploration B.V. (SPEX).

SPEX holds a 45 percent operating interest in Service Contract (SC) 38, which covers the producing Malampaya gas field.

The deal amounts to up to $460 million, with $380 million paid initially and up to $80 million to be paid between 2022 to 2024, contingent on asset performance and commodity prices.

If the deal is approved by the DOE, Malampaya Energy intends to drill another well in a bid to extend the gas field’s life.

“Furthermore, Malampaya Energy would like to highlight the fact that no drilling has been taken to arrest the depletion of the Malampaya field. It has been seven years since the last drilling activity. Malampaya Energy is all out to rejuvenate Malampaya through a drilling campaign once the transaction is completed,” it said.

“The country will surely be short of natural gas by 2022 and further delay will exacerbate the worsening electricity situation. Malampaya Energy is here to support the government’s yearning for energy security. It is ready to take on a challenge no one has taken before,” the company said.

The other partners in SC38 are UC38 LLC, another subsidiary of Udenna with 45 percent, and PNOC-EC with 10 percent.

If approved, Udenna –through its subsidiaries – will end up owning 90 percent of the Malampaya project.

SC 38 is the country’s most successful Petroleum Service Contracts (PSC) of 23 active projects. As the largest natural gas industrial project in the Philippines, it recovered all costs in four years.

Operating since 2001, the Malampaya project is the only local producer of indigenous natural gas. It supplies fuel to around 40 percent of gas-fired plants in Luzon, powering around 3,457 megawatts (MW) of power plants that provide power supply to the Luzon grid.

While the contract will end in 2024, supply from the Malampaya gas field is projected to be depleted by early 2022 or latest by 2027.

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