There’s enough evidence that the decision rendered by the Department of Energy (DOE) to approve the sale of Chevron Malampaya’s 45% stake in the Malampaya gas project to the Udenna group of Dennis Uy is defective and invalid, Senator Win Gatchalian said.

• The Senate Energy Committee Chairperson made the statement after being told by DOE Secretary Alfonso Cusi that no prior approval by the government is needed in the Chevron’s transfer of its stakes to Udenna’s UC Malampaya Philippines Pte Ltd;
• Gatchalian sought clarification from Cusi during the budget hearing as he dug up the statements given by DOE officials to the Senate Energy Committee hearing in November 2020 affirming that the transaction between Udenna and Chevron requires prior approval of the DOE as stated under Section 11 of PD 87;
• Positions aired by the DOE through then Assistant Secretary Leonido Pulido and subsequent submissions by the department to the Senate stated that the transfer of interest in the Malampaya gas field project must be approved by the department before it becomes binding and effective.

“My opinion of this is that it is a defective approval, therefore the approval is invalid because clearly there’s a lot of inconsistencies and any major transaction like this should not lead to confusion. Instead of us appreciating it, we got more confused by the DOE’s own admission that there is indeed confusion,” Gatchalian said in scrutinizing Udenna’s buy-out of Chevron in Malampaya during the hearing of the proposed 2022 budget of the DOE.

The Senate Energy Committee Chairperson made the statement after being told by DOE Secretary Alfonso Cusi that no prior approval by the government is needed in the Chevron’s transfer of its stakes to Udenna’s UC Malampaya Philippines Pte Ltd. and that it was based on an evaluation using the so-called “farm-in process,” which according to Gatchalian made DOE’s explanation all the more confusing.

“Nowhere in the documents that the DOE submitted can you find the argument of using the farm-in (rule). From day one, we were made to understand that this should be approved by the government and the process will follow PD 87 and DC 2007,” Gatchalian pointed out.

The senator was referring to DOE’s Department Circular 2007-04-003 which prescribes the guidelines and procedures for the transfer of rights and obligations in petroleum service contracts under Presidential Decree 87.

“The DOE earlier said the government should not review and approve it. But the DOE is now saying it approved the transaction but used a different method. When I reviewed the documents, there’s no such disclaimer that the DOE used a different method. So, all along in our minds the transaction went through the normal process of DC 2007,” the senator said.

Gatchalian sought clarification from Cusi during the budget hearing as he dug up the statements given by DOE officials to the Senate Energy Committee hearing in November 2020 affirming that the transaction between Udenna and Chevron requires prior approval of the DOE as stated under Section 11 of PD 87.

Positions aired by the DOE through then Assistant Secretary Leonido Pulido and subsequent submissions by the department to the Senate stated that the transfer of interest in the Malampaya gas field project must be approved by the department before it becomes binding and effective.