DOE’s approval of Chevron-Udenna Malampaya deal defective, invalid, says Win

DOE’s approval of Chevron-Udenna Malampaya deal defective, invalid, says Win

By Ernie Reyes

MANILA — There’s enough evidence to show that the decision rendered by the
Department of Energy (DOE) in approving the sale of Chevron
Malampaya’s 45% stake in the Malampaya gas project to the Udenna group
of Dennis Uy is defective and invalid, Senator Win Gatchalian said.

“My opinion of this is that it is a defective approval, therefore the
approval is invalid because clearly there’s a lot of inconsistencies
and any major transaction like this should not lead to confusion.
Instead of us appreciating it, we got more confused by the DOE’s own
admission that there is indeed confusion,” Gatchalian said in
scrutinizing Udenna’s buy-out of Chevron in Malampaya during the
hearing of the proposed 2022 budget of the DOE.

The Senate Energy Committee Chairperson made the statement after being
told by DOE Secretary Alfonso Cusi that no prior approval by the
government is needed in the Chevron’s transfer of its stakes to
Udenna’s UC Malampaya Philippines Pte Ltd. and that it was based on an
evaluation using the so-called “farm-in process,” which according to
Gatchalian made DOE’s explanation all the more confusing.

“Nowhere in the documents that the DOE submitted can you find the
argument of using the farm-in (rule). From day one, we were made to
understand that this should be approved by the government and the
process will follow PD 87 and DC 2007,” Gatchalian pointed out.

The senator was referring to DOE’s Department Circular 2007-04-003
which prescribes the guidelines and procedures for the transfer of
rights and obligations in petroleum service contracts under
Presidential Decree 87.

“The DOE earlier said the government should not review and approve it.
But the DOE is now saying it approved the transaction but used a
different method. When I reviewed the documents, there’s no such
disclaimer that the DOE used a different method. So, all along in our
minds the transaction went through the normal process of DC 2007,” the
senator said.

Gatchalian sought clarification from Cusi during the budget hearing as
he dug up the statements given by DOE officials to the Senate Energy
Committee hearing in November 2020 affirming that the transaction
between Udenna and Chevron requires prior approval of the DOE as
stated under Section 11 of PD 87.

Positions aired by the DOE through then Assistant Secretary Leonido
Pulido and subsequent submissions by the department to the Senate
stated that the transfer of interest in the Malampaya gas field
project must be approved by the department before it becomes binding
and effective. (ai/mtvn)

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