Tycoon Razon to acquire Philippine gas project from Duterte ally

MANILA (Bloomberg): Philippine billionaire Enrique Razon (pic) will acquire a controlling stake in businessman Dennis Uy’s Malampaya gas project, in a move that may help extend the life of a field that fuels some of the nation’s biggest power plants.

Razon’s Prime Infra Holdings Inc and Uy’s Udenna Corp have "kicked off” the acquisition process for the Malampaya deep-water gas-to-power project. The transaction will require consent from the Department of Energy and Philippine National Oil Co - Exploration Corp, which holds a 10% interest in the field, Prime Infra said in a statement.

Prime Infra didn’t provide the size of the stake it’s acquiring nor the purchase price.

Malampaya’s service contract will expire in 2024 and the field, which supplies the gas needed to produce about a fifth of the Philippines’ electricity needs, is expected to be depleted by the end of the decade. Prime Infra said it will apply for an extension and plans for expansion to prop up production as long as the reserves support it.

Udenna said last month that activities to develop and extend the life of the Philippines’ only operating gas field have been put on hold. President Martin Escalona said development plans had been "crippled” following a senate probe into Udenna’s purchase of a majority stake in Malampaya, questioning its financial and technical capability to make the purchase and operate the field.

Uy, a known supporter of outgoing President Rodrigo Duterte, in 2020 bought a 45% stake in the project from Chevron Corp and has agreed to buy Shell Plc’s stake.

The Philippines may start importing liquefied natural gas later this year when a new import terminal is completed. With LNG prices unlikely to come down in the next few years, a move to shore up domestic gas production has become more urgent to ensure national energy security.

This is not the first transaction between Razon and Uy. On May 11, Razon’s Bloomberry Resorts Corp said it signed a term sheet for a possible investment in Uy’s casino venture. Uy has been exploring asset sales and alliances, Escalona said last month.