THE DEPARTMENT of Energy (DoE) said Congress needs to review Presidential Decree (PD) 87, which governs the development of the petroleum industry, noting that its restrictions are hindering investment in the industry.
“It is high time that Congress introduce remedial legislation through amendments, or even revise the entire charter governing the upstream industry, PD 87, which has… remained untouched in almost 50 years,” the DoE said in a statement Tuesday.
It added that the Senate energy committee’s inquiry on Udenna Corp.’s purchase of Chevron Malampaya LLC shares is “causing undue delay to the timeline of the consortium corporations,” which “may eventually take its toll and put our energy security at risk.”
At a hearing on the DoE budget Thursday, Senator Sherwin T. Gatchalian, who chairs the chamber’s energy committee, said the approval of the deal between Udenna and Chevron is “defective… therefore the approval is invalid because clearly, there are a lot of inconsistencies and any major transaction like this should not lead to confusion.”
Mr. Gatchalian said under PD 87 and Department Circular (DC) 2007-04-0003, sale transactions involving petroleum service contracts require prior approval from the government, in this case, the DoE.
The department, however, said in its statement that PD 87 and DC 2007-04-0003 “are square pegs in a round hole when applied to the sale of shares of stock,” and that no rule directs it to review the sale of shares between private corporations.
It said it still reviewed the sale of Chevron shares to Udenna “to ensure that national interest is protected and energy security is not put at risk.”
Chevron had a 45% stake in the Malampaya gas field and Udenna owns the 45% stake of Shell Philippines Exploration B.V. With the Chevron sale, Udenna owns 90% of Malampaya.
The Malampaya gas field accounts for up to 20% of the Philippines’ energy requirements mainly via gas piped from Palawan to power plants in Batangas.
The DoE said in its statement, however, that Chevron will remain the operator of the Malampaya project after the sale. — Bianca Angelica D. Anago