A subsidiary of Dennis Uy's Udenna Corporation is acquiring Shell Philippines Exploration (SPEX), which holds a 45% operating interest in the Malampaya gas field.
Through the deal, Udenna will effectively control Malampaya with a 90% operating interest. It bought Chevron Malampaya LLC's 45% interest in the gas field in 2019.
State-owned Philippine National Oil Company-Exploration Corporation holds the remaining 10%.
In a statement on Thursday, May 20, Shell Petroleum NV announced that it has signed an agreement with Udenna unit Malampaya Energy for a total of $460 million.
Shell said the base consideration for the sale was at $380 million, with additional payments of up to $80 million between 2022 and 2024.
The transaction would be completed by the end of 2021, but it would be retroactively effective January 1, 2021.
"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," said Shell upstream director Wael Sawan.
Shell said the deal will not have any impact on its other businesses in the country. SPEX staff will continue employment under the new ownership.
Malampaya delivers a fifth of the Philippines' electricity requirements through the supply of natural gas to five power plants in Luzon.
"We are tremendously proud of Malampaya Energy for acquiring one of Shell's most successful natural gas assets in Asia, which of course includes the world-class SPEX team currently operating Malampaya," said Uy in a statement.
Malampaya Energy's Belinda Racela said their teams "are accelerating exploration and production plans" to extend the life of the gas field.
"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," said Racela.
Service Contract 38 or the Malampaya gas-to-power project is set to expire in 2024. The Philippine government has yet to announce whether the license would be extended.