Malampaya gas project : Shell to divest 45% stake to Udenna in $460m deal
Royal Dutch Shell is executing a deal worth up to $460 million to sell its interest in the Malampaya gas project in the Philippines to Malampaya Energy XP, a subsidiary of Udenna Corporation.
The deal is being carried out by the company’s subsidiary Shell Petroleum whose 45% stake in Service Contract 38 (SC38) offshore licence is held by Shell Philippines Exploration (SPEX).
Shell will get $380 million in base consideration followed by up to $80 million in payments to be made between 2022 to 2024 that will be contingent on asset performance and commodity prices.
SC38 contains the Malampaya gas field located off the coast of Palawan, which had started commercial production in 2002.
Apart from the gas field, the Malampaya Deepwater Gas to Power Project includes subsea wells and flowlines, a shallow water platform, a depletion completion platform, a 504km long gas export pipeline on the seabed, an onshore gas plant, and also a pipeline laid in Batangas City.
The Malampaya Deepwater Gas to Power Project is said to cover a fifth of the Philippines’ electricity needs by supplying natural gas to five power plants in Luzon.
Shell to sell stake in Malampaya gas project to Udenna subsidiary. Photo courtesy of Royal Dutch Shell plc.
Shell management comments on the Malampaya gas project deal
Wael Sawan – Shell Upstream Director, commenting on the Malampaya gas project deal, said: “Since it began commercial operations in 2002, Malampaya has supplied a significant portion of the Philippines’ energy demand and it will continue powering the country with indigenous gas following a safe transition of the asset and its experienced workforce.
“Today’s announcement is consistent with Shell’s efforts to shift our Upstream portfolio to one that is focused on nine core positions.”
Shell’s partners in SC38 are UC38 (45%), which is also a subsidiary of Udenna, and Philippine National Oil Company Exploration Corporation (PNOC), which holds the remaining stake of 10%.
Commenting on the Malampaya gas project deal, Belinda Racela – top executive of Malampaya Energy said: “The ongoing safety and reliability of Malampaya is our top priority and will be delivered by the same experienced team of upstream professionals from SPEX working with consistent practices. They will be strongly supported by our newly established Upstream Decision Review Board of industry leaders and the ex-Chevron and ex-Shell upstream specialists in our Malampaya Energy business, who are already actively involved in managing the Malampaya consortium.
“We are excited about the future growth opportunities at Malampaya. Our teams are accelerating exploration and production plans to extend the life of the Malampaya field and expand supplies of affordable, safe, low-carbon and indigenous energy for the nation.”
The Malampaya gas project deal, which will be contingent on receipt of consent from licence partners and regulatory approvals, is likely to be wrapped up by the end of this year.