Shell completes exit from Malampaya

SHELL PETROLEUM N.V. (Shell Petroleum) on Tuesday completed the sale of its stake in the operator of the Malampaya gas field to a unit of Razon-led Prime Infrastructure Capital, Inc. (Prime Infra). 

In a statement, the company said its 100% shareholding in Shell Philippines Exploration B.V. (SPEX) has been transferred to Malampaya Energy XE Pte. Ltd. (MEXP), subsidiary of Prime Infra, effective on Nov. 1.

SPEX will continue to operate the Malampaya gas field, where it still has a 45% operating interest.

Shell said SPEX staff will continue to be employed under the new ownership.

The other members of the Service Contract (SC) 38 consortium are a subsidiary of Dennis Uy’s Udenna Corp., and PNOC Exploration Corp., which own a 45% and 10% interest, respectively. The Malampaya concession is set to expire by 2024.

“Since operations began in 2002, the Malampaya gas field has supplied an important part of the Philippines’ energy demand through the dedicated work of our partners and staff, past and present. This sale supports our strategy to create a resilient and competitive upstream portfolio,” Shell’s Upstream Director Zoe Yujnovich said in a statement.

SPEX received its license to operate in the Philippines in 1990, and developed SC 38 offshore northwest of Palawan.

The Malampaya gas field, which began commercial operations in 2002, supplies up to 20% of Luzon’s total electricity requirements, according to the Department of Energy (DoE). However, it is expected to be depleted by 2027.

Shell said the deal has no impact on its other businesses in the Philippines. 

“Shell will continue to pursue opportunities in the Philippines where it can leverage its global expertise,” the company said.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message that investors will now be looking at Shell’s future prospects in the Philippines as it remains one of the market leaders in the energy sector.

Investors will also keep an eye on Prime Infra’s planned P28-billion initial public offering (IPO), which was postponed to the first quarter of 2023 due to unfavorable market conditions.

“Even without considering this deal, the Prime Infra is one of the most anticipated IPOs. It is just unfortunate that the global market weakness has postponed the listing,” Mr. Limlingan said.

The Philippines also has to prepare as Malampaya, the country’s only domestic commercial source of natural gas, runs out in the next few years.

“The country needs to prepare the possible reduction of natural gas flow from the facility estimated in the coming years, since natural gas has been one of the major sources of energy/electricity for the country,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said. — A.E.O.Jose