Shell offloads Philippines gas field
Shell has agreed to sell its 45% operating interest in service contract 38 (SC38) offshore Philippines to a subsidiary of local group Udenna for up to $460mn, the Anglo-Dutch major reported on May 20.
The company revealed to NGW it intended to divest the asset in September last year. The Malampaya field, discovered in 1991 and brought online just over a decade later, supplies gas to four power plants on the island of Luzon. But it is expected to run dry by 2027, according to the Philippines' energy department.
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The sale includes platforms, a 504-km pipeline that carries Malampaya's gas to Luzon and an onshore gas plant, along with other infrastructure. Shell will receive at least $380mn for its stake, and potentially up to $80mn between 2022 and 2024 based on how the asset performs and prices. The deal is expected to be closed by the end of the year.
"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,” Shell's upstream director Wael Sawan said in a statement. “Today’s announcement is consistent with Shell’s efforts to shift our upstream portfolio to one that is focused on nine core positions."
Udenna, founded by Chinese-Filipino business magnate Dennis Uy and primarily involved in petroleum and shipping, already has a 45% interest in SC38 which it acquired from Chevron in March last year. Philippine National Oil Co owns the remaining 10%.