TAGUIG CITY - Following the directive of the Chairman of the Senate Committee on Energy at yesterday’s (14 July) public hearing on the Malampaya Gas-to-Power Project, the Department of Energy (DOE) immediately submitted the requested documents concerning the Sales Purchase Agreement between Chevron Philippines Ltd. (Chevron) and UC Malampaya Philippines Pte. Ltd. (Udenna).
“I have instructed our DOE officials to provide justifications of our legal, technical and financial evaluation with regard to the approval of transfer of the participating interest of Chevron to Udenna, pursuant to Petroleum Service Contract (SC) No. 38,” Secretary Alfonso G. Cusi said.
In a letter dated 14 July 2021 addressed to the Senate Committee on Energy Chairperson, the DOE provided pertinent memoranda, financial and evaluation checklists on the following considerations:
(a) The Sales Purchase Agreement between Chevron and Udenna is just a transaction of sale of shares between the parties in which the DOE is not privy to;
(b) Chevron is part of the consortium owning 45% thereof, but not involved in the operations. Shell Philippines Exploration B.V. (SPEX) is designated as the operator of the Malampaya Deep-Water Gas-to-Power Project;
(c) Udenna was initially of the position that the transaction need not to be evaluated by the DOE pursuant to DC No. DC2007-04-0003, "Prescribing the Guidelines and Procedures for the Transfer of Rights and Obligations in Petroleum Service Contracts under Presidential Decree No. 87". However, the DOE insisted on having it evaluated using the Circular as a benchmark to protect the best interests of the Filipino people.
Furthermore, the DOE required Udenna to submit documents in compliance with the financial, technical, and legal requirements benchmarked by DC2007-04-0003.
In determining the company's financial, technical, and legal qualifications, the DOE has found the following:
• On the Financial Qualification of UC 38
The DOE inquired on the financial capacity of the corporation in financing the implementation of the approved Work Program, which is equivalent to their share in the consortium, or 45% of the entire budget needed.
UC38 LLC submitted unaudited financial statements as of September 2020 with Available Working Capital amounting to USD177.421M, which appeared to meet its commitment of USD 64.455M for CY2020. In view of the unaudited financial statements, UC38 LLC was required to submit its Bank Balances as of December 2020. UC38 LLC complied and submitted a Bank Balance Summary of USD 72.283M. In addition to that, it also submitted a Bank Balance Summary of UCMPPL in the amount of USD 39.170M USD.
• On the Technical Qualification of UC38
Technical Qualification is established by inquiring on the manpower and technology utilized to implement the commitment in the Work Program. Since it is just a sale of shares of stock, the manpower, the technological, and operational framework remained the same, not mentioning the fact that UC38 LLC will not be involved in the operations.
• On the Legal Qualification of UC38
The Legal Memorandum established that UCMPPL is registered to undertake investments in upstream energy activities, and therefore is organized or authorized for the purpose of engaging in petroleum exploration and development. This is supported by incorporation papers required by the DOE for submission by UCMPPL.
"We will continue to exhaust all measures in thoroughly evaluating the legal, financial, and technical aspects of the transaction," Secretary Cusi concluded.
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