The company will be paid a base price of $380m and contingent payments of up to $80m
The onshore gas plant in Batangas and the Malampaya gas field are part of an integrated gas to power project in the Philippines. (Credit: Department of Energy / Philippine Information Agency – IDPD / Wikipedia.org)
Royal Dutch Shell has agreed to divest its interest in the producing Malampaya gas field offshore the Philippines and its associated facilities to Malampaya Energy XP in a deal worth up to $460m.
In this connection, its subsidiary Shell Petroleum has signed an agreement to sell Shell Philippines Exploration (SPEX) to Malampaya Energy XP, which is a subsidiary of Udenna.
Shell Philippines Exploration has a stake of 45% in Service Contract 38 (SC38), which includes the Malampaya gas field. The offshore gas field is part of the Malampaya Deepwater Gas to Power Project.
As per the terms of the deal, Shell will get a base consideration of $380m. Additionally, Malampaya Energy XP will make contingent payments of up to $80m between 2022 to 2024, which will be based on asset performance and commodity prices.
Shell Philippines Exploration is partnered by UC38, a subsidiary of Udenna, which has a stake of 45% in SC38. The other partner in the licence located offshore Palawan is Philippine National Oil Company Exploration Corporation (PNOC) with a 10% stake.
Udenna chairman and CEO Dennis A. Uy said: “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.”
The main components of the Malampaya project are subsea wells and flowlines, a shallow water platform and a depletion completion platform for gas processing, a 504km long gas export pipeline on the seabed, an onshore gas plant, and a pipeline in Batangas City.
Shell upstream director Wael Sawan said: “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.
“Today’s announcement is consistent with Shell’s efforts to shift our Upstream portfolio to one that is focused on nine core positions.”
The deal, which is subject to partner and regulatory consent, is expected to close by the year-end.