Senator Win Gatchalian stressed that the recent agreement between Enrique Razon, Jr.’s Prime Exploration Pte. Ltd., a subsidiary of Prime Infrastructure Capital Inc. (Prime Infra), and Dennis Uy on the acquisition of his MEXP Holdings Pte. Ltd. (MEXP Holdings) should be in compliance with the law to ensure the protection of consumers, the government, and the country’s energy security.
In 2021, Uy’s Malampaya Energy XP Pte. Ltd. (Malampaya Energy), a wholly owned subsidiary of MEXP Holdings, was set to acquire the controlling interest in Shell Petroleum N.V., the parent of Shell Exploration B.V. (SPEX), which is the operator of the Malampaya deep water gas-to-power project. However, the Philippine National Oil Company Exploration Corporation (PNOC EC) did not give its consent to the transaction.
“Since PNOC EC did not give its approval, Malampaya Energy does not hold the controlling interest of SPEX. So, Prime Infra cannot say that it acquired a major stake in Malampaya until Malampaya Energy gets government approval. Nevertheless, we don’t know the terms of the deal. So, we have to make sure that the transaction is compliant with law and regulation as Malampaya is the country’s single most important energy resource,” said Gatchalian who is set to file a Senate Resolution in light of the recent news.
Gatchalian reminded all parties concerned that the agreement requires prior approval from the Department of Energy (DOE) under Presidential Decree (PD) No. 87 and Department Circular (DC) 2007-04-0003. PD 87, otherwise known as the Oil Exploration and Development Act of 1972, regulates energy exploration and development activities. Service Contract (SC) 38, or simply the Malampaya project, was executed in 1990 under this law.
Specifically, Gatchalian said the circular prescribes the guidelines and procedures to ensure that the assignee or transferee possesses the legal qualification, financial resources, and technical expertise and experience to undertake its obligations and commitment under the petroleum service contract.
“The recent news has proven that we were right all along that Uy does not have the financial capability to run Malampaya, which fuels 30% of Luzon’s electricity requirements or about 20% of the entire country’s power,” Gatchalian said.
Razon’s Prime Infra recently signed a share purchase agreement to acquire MEXP Holdings, a unit of Uy’s Udenna Corp.
“Kailangang maging maingat tayo at manatiling nakabantay sa ganitong mga transaksyon dahil nakasalalay dito ang seguridad ng enerhiya ng buong bansa,” Gatchalian said.