Shell signs US$460 million agreement to withdraw from Philippine gas field development

According to Reuters news on May 20, Royal Dutch Shell recently agreed to sell shares in an offshore natural gas field in the Philippines for US$460 million as part of its compression oil and gas business strategy.

Shell will sell a 45% stake in the service contract 38 (SC38) block to a subsidiary of the Udenna Group.

Shell said in a statement that the basic consideration for the transaction is US$380 million.

The agreement will be completed by the end of 2021.

According to data from the Philippine Department of Energy, the Malampaya natural gas field discovered in 1991 currently provides fuel for power plants and meets about one-fifth of the country's electricity needs.

Malampaya oil production is declining, and the Philippine Department of Energy expects it to be exhausted in 2027.

Udinese Group spent US$565 million to acquire 45% of Malampaya shares from Chevron in 2019, and this time its shareholding will be doubled.

The National Petroleum Corporation of the Philippines holds the remaining 10% of the shares.

　　Last year, the Udinese Group expressed interest in buying shares in Shell.

　　In addition to natural gas reserves, Malampaya's assets also include subsea pipelines and other facilities that can be used by future sellers and users of imported LNG.

　　The Philippines needs to import LNG before Malampaya is exhausted.

　　Zhan Legan, excerpted from Reuters

　　The original text is as follows:

　　Shell exits Philippine gas field in $460 mln deal

　　Royal Dutch Shell has agreed to sell its stake in an offshore gas field in the Philippines for $460 million as part of its strategy to narrow its oil and gas operations.

　　Shell sold its 45% stake in Service Contract 38 (SC38), a deep water licence which includes the producing Malampaya gas field, to a subsidiary of the Udenna Group which already holds a 45% stake in the project.

　　The base consideration for the sale is $380 million, with additional payments of up to $80 million between 2022 to 2024 contingent on asset performance and commodity prices, Shell said in a statement.

　　The deal is due to complete by the end of 2021.

　　The Philippines' Malampaya gas field, discovered in 1991, currently supplies fuel to power plants that deliver about a fifth of the country's electricity requirements, based on energy ministry data.

　　Malampaya's output is declining, with the Philippines' energy ministry expecting it to run dry by 2027.

　　Philippine conglomerate Udenna, will double its interest in Malampaya, having bought the first 45% stake from Chevron in 2019 for $565 million.

　　State-owned Philippine National Oil Company (PNOC) holds the remaining 10%.

　　Udenna had expressed an interest in buying Shell's stake last year, when company spokesman Raymond Zorrilla described Malampaya as "a high-quality asset strategic to the future welfare and energy security of the country.
"

　　Aside from gas reserves, Malampaya's assets include undersea pipelines and other facilities that could be tapped by future sellers and users of imported liquefied natural gas.

　　The Philippines will need to import LNG before Malampaya runs dry.
The government has approved several LNG import terminal projects near the Malampaya platform.