DOE to Gatchalian: Saying Chevron-Udenna deal was rigged is ‘misguided’


Posted at Oct 27 2021 03:54 AM

MANILA—The Department of Energy on Tuesday said it did not break any law when it approved the sale of Chevron’s stake in the Malampaya project to Udenna Corp.

In a statement, the DOE said Sen. Sherwin Gatchalian was "obviously confused" when he alleged that it violated Presidential Decree 87 and its own department circular in approving the Chevron sale. 

Gatchalian called the transaction "lutong macau" or rigged, but the department said the lawmaker's position was "misguided, lacking in factual and legal basis."

The agency said that when the sale was being evaluated it looked at the financial soundness and capability of Chevron Malampaya LLC since it would implement and operate the service contract with the DOE, even after its shares are now owned by another corporation.

"If it were a farm-in, or transfer of rights and obligations agreement, as envisioned by DC 2007-04-0003, the evaluation will be different because SC 38’s implementing corporation will then be the buyer and transferee of the rights and obligations, which is UC Malampaya. Sen. Gatchalian, who is obviously confused, holds on to this theoretical framework. He must, however, realize that it is the financial soundness and capability of the implementing corporation that should be evaluated, because it is the one that is operating the project," the department said.

Gatchalian, chairman of the Senate Committee on Energy, said hearings conducted by the Senate panel revealed the DOE violated Presidential Decree 87 and its own department circular in approving the Chevron sale. 

He said 2 Udenna Corp. subsidiaries — UC Malampaya and UC38 — were evaluated separately for their legal and financial capabilities, respectively.

The DOE, however, argued that "Presidential Decree (PD) 87 and DC 2007-04-0003 are square pegs in a round hole when applied to a sale of shares of stocks.

"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 been existing and has remained untouched in almost 50 years. On one hand, the DOE is also currently working on issuing the appropriate rule," the DOE added.

The agency said the Senate inquiry is causing "undue delay to the timeline of the consortium corporations," which may put the country's energy security at risk.

Energy Sec. Alfonso Cusi, billionaire Dennis Uy and several others over the sale of Chevron’s stake in the Malampaya project to the Davao-based businessman’s Udenna Corp. 

The complainants — Balgamel de Belen Domingo, Rodel Rodis, and Loida Nicolas Lewis — said they were “concerned citizens who advocate for the Filipino people’s right to energy security.”

They alleged that anomalies in the Malampaya Project resulted in “a minimum of over P21 (billion) to 42 billion in total losses to the government.”

The DOE earlier said Udenna Corp.'s acquisition of Chevron Malampaya, which holds a 45-percent interest in the Malampaya gas project, was not a "midnight deal".

Meanwhile, the department said the sale of Shell Philippines Exploration BV shares of stocks to Udenna is pending review.