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IBP calls for transparency in gov't assessment of Malampaya share sale

Kristine Joy Patag - Philstar.com
IBP calls for transparency in gov't assessment of Malampaya share sale
Commissioned in 2001, the Malampaya gas field offshore Palawan supplies all of the Philippines’ current natural gas. But it is forecast to be nearly depleted between 2027 and 2029.
Bworldonline

MANILA, Philippines — The Integrated Bar of the Philippines is calling for transparency in the government’s evaluation of transactions relating to the sale of shares in the Malampaya project.

In a statement, the national organization of lawyers said they view the latest development in the Malampaya gas project “with deep apprehension and concern.”

The gas project, which accounts for a vital resource of the country’s energy mix, is seen for decommissioning between 2027 and 2029 after a projected decline in energy output starting 2024.

Shell Philippines Exploration B.V. (SPEX) and Chevron each had a 45% stake in the Malampaya project. The remaining 10% belonged to state-run Philippine National Oil Corp. (PNOC). But Dennis Uy’s Udenna Corp purchased both Shell and Chevron’s shares in May 2021 and in 2020, respectively.

The Department of Energy has yet to approve the deal with Shell.

The IBP, however, noted that “there have been numerous allegations” surrounding the divestment. It said: “The assignment of interests, which will ultimately enable Udenna to takeover the Malampaya facility is allegedly detrimental to national security and interest.”

Stressing the “strategic importance” of the Malampaya energy resource, the IBP called on the DOE to “rescind its approval of Chevron’s transfer of its 45% interest in Malampaya to Udenna’s subsidiary, UC Malampaya” and “hold in abeyance, its approval of SPEX’s transfer of its 45%” to another Udenna subsidiary.

The IBP also appealed to the Office of the Ombudsman to “expeditiously resolve” the graft complaint filed against Energy Secretary Alfonso Cusi, Udenna Chairman Dennis Uy and 24 others over the alleged anomalies in the sale of shares.

Proposed PNOC takeover

The lawyers’ association also urged the DOE to review the extension of Petroleum Service Contract (SC) 38 in favor of the original Malampaya consortium — SPEX, Chevron and PNOC EC. SC 38 will expire in 2024.

But should the sales of SPEX and Chevron shares proceed, the IBP called on the PNOC to “match any offer” from Uy's company, as it has “the mandate and wherewithal to raise funds for acquiring the controlling interests in Malampaya."

“A PNOC takeover of SC 38 will be financially advantageous to the Philippine government since Malampaya is a producing field with existing infrastructure for other petroleum discoveries,” it added.

With a state-owned company assuming control of the operations, the Philippines can also be assured that Malampaya’s 500-kilometer gas pipeline, which is part of the resource-rich Recto Bank in the West Philippine Sea, shall be protected from foreign interference.

Without naming names, the IBP added: “To fund further exploration and development, a buyer who is not technically and financially capable of operating Malampaya may tap companies from foreign companies having adverse interests in the West Philippine Sea dispute. This will place our strategic energy resources and infrastructure in the hands of hostile foreign interest.”

“The DOE must exercise transparency in evaluating transactions in relation to critical energy resources and ensure that developers are financially and technically competent,” the lawyers’ group added.

ALFONSO CUSI DENNIS UY DEPARTMENT OF ENERGY INTEGRATED BAR OF THE PHILIPPINES MALAMPAYA GAS PROJECT
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