Philippine billionaire Enrique Razon will acquire a controlling stake in businessman Dennis Uy’s Malampaya gas project, in a move that may help extend the life of a field that fuels some of the nation’s biggest power plants. Significantly, Shell is also in the process of trying to divest its share of Malampaya.
Razon’s Prime Infra Holdings Inc. and Uy’s Udenna Corp. have “kicked off” the acquisition process for the Malampaya deep-water gas-to-power project. The transaction will require consent from the Department of Energy and Philippine National Oil Co. (PNOC) – Exploration Corp., which holds a 10% interest in the field, Prime Infra said in a statement.
Prime Infra didn’t provide the size of the stake it’s acquiring from Uy, nor the purchase price.
Malampaya’s service contract will expire in 2024 and the field, which supplies the gas needed to produce about a fifth of the Philippines’ electricity needs, is expected to be depleted by the end of the decade. Prime Infra said it will apply for an extension and plans for expansion to prop up production as long as the reserves support it.
The acquisition plan comes a month before President-elect Ferdinand Marcos Jr. takes office on June 30. Marcos has said energy security would be a priority, with the deal’s approval potentially falling under his administration.
Udenna said last month that activities to develop and extend the life of the Philippines’ only operating gas field have been put on hold. President Martin Escalona said development plans had been “crippled” following a senate probe into Udenna’s purchase of a majority stake in Malampaya, questioning its financial and technical capability to make the purchase and operate the field.
Uy, a known supporter of outgoing President Rodrigo Duterte, in 2020 bought a 45% stake in the project from Chevron Corp. and has agreed to buy Shell’s stake.
However, Shell’s (LON:SHEL) sale of its 45% share of the Malampaya gas project in the Philippines to Udenna Corporation for $460 million stalled after the country’s national oil company PNOC blocked the deal amid crumbling political support, reported Energy Voice earlier this year.
“The Shell Philippines Exploration [SPEX] sale transaction to Malampaya Energy XP (an Udenna group company) remains active,” a Shell spokesperson told Energy Voice today.
The Philippines may start importing liquefied natural gas (LNG) later this year when a new import terminal is completed. With LNG prices unlikely to come down in the next few years, a move to shore up domestic gas production has become more urgent to ensure national energy security.
Razon has interests in Service Contract 72 — a gas field in Reed Bank southwest of Malampaya — which the Philippines is looking at as an alternative to Malampaya.
Malampaya’s fixed infrastructure, such as pipes could be used to commercialise SC 72. But energy exploration in SC 72 has largely been stalled by a territorial dispute between the Philippines and China in the South China Sea, which poses a challenge to Marcos’s energy security agenda.
This story was updated at 5.10am GMT to reflect the comment from Shell.