The Singapore-incorporated Malampaya Energy XP Pte. Ltd., a subsidiary of Udenna Corporation of businessman Dennis Uy, which is buying the 45-percent stake of Shell Philippines Exploration B.V. (SPEX) in the Malampaya gas field venture, has just US$100 (or P5,000) capitalization, as revealed in a legislative inquiry undertaken by the Senate Committee on Energy.

Given that the acquisition cost of Shell’s interest in the gas field will be at a whopping US$460 million, Senate Committee on Energy Chairman Sherwin T. Gatchalian fiercely quizzed the Department of Energy (DOE) on what are the particular parameters and criteria it has been evaluating and weighing up when it comes to the targeted approval of the equity divestment of Shell to the Udenna group.

“Basically that is the capital, will it qualify? Will this be declared as financially qualified?” the lawmaker raised, as he interrogated Energy Secretary Alfonso G. Cusi on the financial state of the shell company used by Udenna for that second batch of acquisition in the Malampaya project.


Cusi stated “there are funders, how the buyer and the seller agree in this case… what the funders will have on the satisfaction of the sale agreement is beyond us.”

The energy chief added “what we’re looking now on their capitalization – is their ability to continue to work, their ability to fund the development, their ability to continue the exploration work and that they have to satisfy with us.”

Cusi stressed “since we are requiring them a three-year program, we have to make sure that that funds for the three-year program, they would be able to fund that.”

Nevertheless, Gatchalian sounded off that based on the Senate’s evaluation, even the working capital base of Udenna is deficient. And when the energy department was asked if it was aware of that, Director Cesar Dela Fuente of the DOE’s Energy Resource Development Bureau (ERDB) stated that they have yet to countercheck and qualify the data.

Dela Fuente emphasized that on the technical side,” the DOE’s job on this transfer is to ensure or to see to it that the management and technical operations are technically qualified based on the submitted workforce or management by the consortium.”

It was also divulged by Philippine National Oil Company-Exploration Corporation (PNOC-EC) President Rozzano D. Briguez that based on the outcome of their own due diligence in Udenna’s acquisition of the 45-percent stake of Chevron in Malampaya, part of the payment came from the ‘net entitlement of Udenna’ from Malampaya revenues accruing from June 2019 to June 2020 – and that amounted to US$157 million.

That portion of the payment of Udenna to the Chevron stake purchase then essentially came directly from Malampaya — and these were accumulating already to the benefit of Uy’s company even prior to the closing of the sale transaction in March 2020; hence, that prompted Gatchalian to remark that the Filipino people were “ginisa sa sariling mantika” (fried in their own oil) or essentially bamboozled in that sale process.

The PNOC-EC chief executive further specified that of the total US$565 million payment to Chevron, the bulk of US$375 million came from loans secured from foreign banks ING Bank and Australia New Zealand Banking Group (ANZ); while the US$33 million should have come from equity payment of Udenna and it targeted that to be funded via its proposed P11 billion worth of shares issuance.

But as culled by the Senate body, the planned shares issuance of Udenna had not materialized until now, thus, Gatchalian opined that the Uy company may just have had “laway na puhunan” (no cash infusion) in the Chevron acquisition in Malampaya.

Given the hazy terms of approval accorded by DOE to Udenna on the Chevron equity purchase, Gatchalian forthrightly told Cusi that “we’re not happy and satisfied on the explanation on how the department came up with that approval,” and he was also disappointed that the DOE failed giving straight answers to questions on the financial and technical capacity of Udenna to take over the Malampaya field.

In the Senate probe, it was just plainly laid down that the shares acquisition for the Shell stake will be funded by four banks, which had been reported earlier to comprise of ING Bank, ANZ, Deutsche Bank and Farallon Capital.

On the proposal for state-owned PNOC-EC to exercise its ‘right to match’ on Udenna’s offer to Shell, it was noted by Briguez that they already issued waiver on that option based on prescription of their Joint Operating Agreement (JOA) in the Malampaya project, although he qualified that the company has not given its formal consent yet on the shares sale of Shell to the Uy-led firm.

Source: Manila Bulletin (