Page 6 - AsianOil Week 28 2021

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Philippine Senate hearing seeks

clarity on Malampaya sale

The Senate committee on energy has heard testimony
on Udenna’s acquisition of Shell’s stake in the gas field

COMMENTARY PHILIPPINE Senator Sherwin Gatchalian has committee hearing this week. Following his
somewhat mysteriously opted to crusade against questioning of the general manager of field
Royal Dutch Shell’s sale of its stake in the deepwa- operator Shell Philippines Exploration (SPEX),
WHAT: ter Malampaya field to local conglomerate Udenna. Don Paulino, Gatchalian complained that the
Udenna’s bid for Shell’s The senator, who is also chair of the Sen- developer had not demonstrated prudence in its
45% stake in Malampaya ate committee on energy, has demanded that selection of Udenna’s bid. This is despite the fact
is under the microscope. Udenna demonstrate its technological and that Udenna put forward the most compelling
financial competence to take over the coun- offer, while PNOC would have struggled to raise
WHY: try’s only commercial natural gas field while the equivalent funding.
Some politicians are also demanding that the Department of Energy Paulino told the July 14 Senate hearing
concerned about the (DOE) explain is review process. that an independent, Singapore-based com-
conglomerate not having Udenna has agreed to pay up to $460mn for pany had reviewed and evaluated all the
sufficient expertise or Shell’s 45% stake in the field, after having already bids before finding that Malampaya Energy
money. secured Chevron’s 45% interest earlier this year. – a Udenna unit – had “submitted the most
The DOE signed off on the Chevron deal, compelling offer”.
WHAT NEXT: much to Gatchalian’s dismay, with the senator The executive noted that in addition to the
The deal is likely to making similar demands for transparency. cash incentive, Malampaya Energy’s pledge to
progress given a lack of Shell and Chevron have both quit Malam- absorb the SPEX team meant that the project
compelling alternatives paya as the field is in decline, with some forecasts would not witness a brain drain. Moreover,
suggesting it could run dry by the middle of the Paulino said the Udenna unit had submitted a
decade. The super-majors have little interest transition plan that included the acquisition of
in maintaining an end-of-life asset, and while exploration drilling expertise.
Gatchalian has argued that state-owned Phil- Gatchalian, however, argued that Malampaya
ippine National Oil Corp. (PNOC) could have Energy had no upstream track record and that
stepped in, the state major has shown little desire by picking the company Shell had not “demon-
to expand its 10% holding in the field. strated or exercised prudence”.
He said: “Looking only at the financial aspect
In the hot seat or the best offer is not the best for the country. It
Gatchalian quizzed officials from Shell, Udenna might be best for Shell but it might not be the best
and PNOC about the deal in a Senate energy for the country. Hence we have that evaluation

Philippine Senator Sherwin Gatchalian.

P6 www. NEWSBASE .com Week 28 15•July•2021