Former energy official urges gov’t takeover of Malampaya project

February 17, 2023


For former energy undersecretary Eduardo Mañalac, the Philippine government should take full control of the Malampaya project to raise funds for social services.

The Malampaya project is currently managed by Dennis Uy’s Udenna Corporation and Enrique Razon Jr.’s Prime Infra. Mañalac notes that both companies are deemed technically and financially unqualified to handle the project.

The Service Contract 38 or the Malampaya project is due to expire in 2024. Upon termination, the government will get control of the service contract. However, DOE Secretary Raphael Lotilla is set to extend the two companies’ service contracts for another 15 years.

Udenna Corporation and Prime Infra earn an estimated P50 million ($906,000) a day each. Such incomes, Mañalac said, can be used to promote and uphold the people’s welfare.

“This is the amount of money that was given away by our government to these two undeserving, unqualified companies,” he said. “These amounts should have been earned by the government.”

With P18 billion ($326.2 million) of annual revenue, Mañalac said that these funds can build 360 school buildings, 16,000 classrooms, and 30 modern provincial hospitals, among others.

“This is how much the Filipino people are missing out on the riches of Malampaya,” Mañalac said during the West Philippine Sea CATCH Talk Show last February 9 titled “Why will we give it away again for another 15 years?”

The online event was organized by the National Youth Movement for the West Philippine Sea (NYMWPS).

Complicated consortium

In November 2019, Chevron sold 45 percent of its interests to Udenna Corporation, a first-timer in the oil production business.

“There is no record we can find that Udenna Corporation nor its subsidiary UC Malampaya have any record of exploration and production of oil and gas in the Philippines or in any other part of the country or world,” Mañalac said. “How did an unqualified, technically inexperienced (company), get to be a service contractor?”

In May 2021, MEXP Holding Pte. Ltd., a unit of Udenna Corporation, acquired 45 percent interest from Shell, wherein Philippine National Oil Co. Exploration Corporation (PNOC-EC) refrained from giving consent. Later that year, Razon’s Prime Infra bought MEXP Holding Pte. Ltd. from Udenna, which has an ongoing deal with SPEX, a Shell affiliate.

Utilizing state-owned facilities

The PNOC-EC was established in 1973 by former President Ferdinand Marcos Sr., in response to the oil crisis in the Philippines. It has six coal operating contracts in different areas within the country.

Alongside this, Presidential Decree No. 87 was also implemented which sought to create more opportunities for oil exploration, production, and development of the country’s petroleum resources. It also included standards that consortiums and third parties must adhere to for them to officially become a service contractor.

“You should give it a thought, why the government led by the DOE secretary, who is the Chairman of PNOC, would not ask its own company to take it over?” he added.

Generating revenue

By letting Udenna Corporation and Prime Infra become service contractors, Mañalac said that the government is mainly losing funds to the two companies in question. “If the government had taken over those interests, up to now, up to the present, it would have earned approximately $1.6 billion.”

At present, the Malampaya project interests are divided: Both Udenna Corporation and Prime Infra hold 45 percent interest each, and the remaining 10 percent is allocated to the PNOC-EC. (JJE, DAA) 

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