The Philippines' energy ministry yesterday defended the sale of the Malampaya gas project - formerly controlled by a Shell (AMS:RDSA) and Chevron (NYSE:CVX) joint venture - to a company run by an ally of President Rodrigo Duterte, dismissing a graft complaint.
Natural declines and underinvestment in new exploration has left Philippine oil and gas production in freefall posing significant risks to future energy security. The risk is particularly acute given how reliant the Southeast Asian nation is on oil and gas for power generation, industrial processes and transportation, warn analysts at Fitch Solutions. But interest from investors has been rekindled.
Philippine tycoon Dennis Uy's Udenna conglomerate struck a deal worth up to $460 million to buy a gas exploration and development company from Shell last week. The deal, which attracted a premium valuation and boosts Udenna’s share in the Malampaya gas field to 90%, is positive for both the Philippines and Shell.
Philippine business tycoons are eager to buy Shell’s stake in the deep-water Malampaya project. However, any potential suitors for the 45% interest, valued at between $250 million and $300 million by analysts at Rystad Energy, will need to bring strong technical skills to eek more gas out of the aging field.
The Philippines is accelerating plans to import LNG, as Shell seeks to exit the country’s largest gas field, creating more uncertainty for the waning domestic upstream sector.