Oil and gas giant Shell has struck a deal to sell its subsidiary Shell Philippines Exploration B.V. (SPEX) to Udenna Corp's subsidiary Malampaya Energy XP.
SPEX holds a 45% operating interest in Service Contract 38 (SC38), which includes the producing Malampaya gas field.
The base consideration for the sale is US$380 million, with additional payments of up to US$80 million between 2022 to 2024 contingent on asset performance and commodity prices. Subject to partner and regulatory consent, the transaction is targeted to complete by the end of 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 Wael Sawan, Shell’s Upstream Director. “Today’s announcement is consistent with Shell’s efforts to shift our Upstream portfolio to one that is focused on nine core positions.”
Shell said that SPEX staff would continue their employment under the new ownership.
SPEX received its license to operate in the Philippines in 1991. Since then the company has become the operator of Malampaya to explore and develop SC38 offshore Northwest of Palawan. Malampaya began its commercial operations in 2002.
The major components of Malampaya include subsea wells and flowlines, a shallow-water platform and a depletion completion platform to process natural gas, a catenary anchored leg mooring-buoy for the export of liquid condensate, a 504-kilometer long gas export pipeline on the seabed, and an onshore gas plant and pipeline in Batangas City.
The other partners in SC38 are UC38 LLC, a subsidiary of Udenna Corporation (45%), and Philippine National Oil Company Exploration Corporation (10%).
To remind, in March 2020, U.S. oil major Chevron completed the exit from the Shell-operated Malampaya gas project with the sale of its 45% non-operating interest in the field to Udenna. The sale deal had been signed in October 2019.
The Malampaya natural gas field lies about 50 miles (80 km) northwest of the Philippine island of Palawan.