TAGUIG CITY - The Department of Energy told the Senate today (28 September), that it has exercised its authority to protect the interest of the government and the Filipino people regarding the sale or transfer of shares of the members of the consortium operating the Malampaya field under Service Contract 38.

In the hearing of the Senate Committee on Energy, chaired by Sen. Sherwin Gatchalian, DOE officials noted that Chevron Malampaya LLC initially said a review of the transfer of the shares of its parent company Chevron Philippines, Ltd. to UC Malampaya Philippines Pte. Ltd. is not necessary.

However, Energy Resource Development Bureau Director Cesar Dela Fuente told the panel, chaired by Sen. Sherwin Gatchalian, that when Chevron Malampaya requested for a change of name the DOE insisted on a review of its deal with UC Malampaya (Udenna Corp.) of Davao businessman Dennis Uy.

“The imprimatur of Secretary Cusi is that in case of doubt, to apply the department circular as the benchmark to ensure that the parties are legally, technically and financially qualified ,” Dela Fuente said.

He was referring to DOE Department Circular 2007-04-0003, which mandates that “the rights and obligations under a petroleum service contracted executed under PD 87, as amended, shall not be assigned or transferred without the prior approval of the DOE.”

Dela Fuente said the DOE insisted on the review despite the diverging opinion within the department on the applicability of the department circular to the Chevron deal with UC Malampaya. 

DOE Financial Services Director Araceli Soluta told the Senate panel that they were of the position that the circular is applicable to  transactions pertaining to the transfer or assignment of contractual rights and obligations in service contracts of members of the consortium. “We decided to conduct a review to ensure protection of the interest of the Filipino people and no interruption of the services of Malampaya,” Dela Fuente stressed. 

Sen. Gatchalian has expressed doubts on the legality of the Chevron-UC Malampaya as well as the financial capability of the Malampaya field provides fuel to generate about 30 percent of Luzon's energy requirements thus providing cheaper electricity bills for consumers as well as reducing our country’s dependence on foreign oil imports. 

The DOE Financial Services Department eventually recommended approval of the Chevron deal with UC Malampaya. According to DOE Legal Services Director Atty. Arthur Tenazas, their review of the deal showed that “UC Malampaya is a legally-registered corporation and it is qualified to acquire the shares of Chevron Malampaya Philippines. Dela Fuente said he stands by the recommendations on the financial soundness and legality of the Chevron-Udenna deal.

“In the interest of the national government, yes,” said Dela Fuente. “I applied the presumption of regularity in the conduct of review of our financial services. Yes, Mr. Chair,” he added, addressing Sen. Gatchalian. Likewise, Dela Fuente said the DOE applied the 2007 circular in the case of the sale of Shell N.V.’s shares in SPEX (Shell Philippines Exploration B.V.) to  Malampaya Energy XP Pte. Ltd. (Malampaya Energy). He also noted that for the deal to be completed it requires the consent of PNOC-EC as a member of the SC38 consortium and the prior approval of the DOE. “So there is no consummation of the sale yet because the two conditions have yet to be met,” Dela Fuente told the Senate panel. 

DOE Assistant Secretary Gerardo Erguiza took note of the observation of Sen Win Gatchalian commending the DOE and its personnel for providing a framework of the review. Asec. Erguiza suggested further that if there was anything that needs to be improved,  our legislators may look into an an amendment of the law and the current rules. 

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