Press Release
October 24, 2021

Gatchalian: DOE's approval of Chevron-Udenna Malampaya deal defective, invalid

There's enough evidence that the decision rendered by the Department of Energy (DOE) to approve the sale of Chevron Malampaya's 45% stake in the Malampaya gas project to the Udenna group of Dennis Uy is defective and invalid, Senator Win Gatchalian said.

"My opinion of this is that it is a defective approval, therefore the approval is invalid because clearly there's a lot of inconsistencies and any major transaction like this should not lead to confusion. Instead of us appreciating it, we got more confused by the DOE's own admission that there is indeed confusion," Gatchalian said in scrutinizing Udenna's buy-out of Chevron in Malampaya during the hearing of the proposed 2022 budget of the DOE.

The Senate Energy Committee Chairperson made the statement after being told by DOE Secretary Alfonso Cusi that no prior approval by the government is needed in the Chevron's transfer of its stakes to Udenna's UC Malampaya Philippines Pte Ltd. and that it was based on an evaluation using the so-called "farm-in process," which according to Gatchalian made DOE's explanation all the more confusing.

"Nowhere in the documents that the DOE submitted can you find the argument of using the farm-in (rule). From day one, we were made to understand that this should be approved by the government and the process will follow PD 87 and DC 2007," Gatchalian pointed out.

The senator was referring to DOE's Department Circular 2007-04-003 which prescribes the guidelines and procedures for the transfer of rights and obligations in petroleum service contracts under Presidential Decree 87.

"The DOE earlier said the government should not review and approve it. But the DOE is now saying it approved the transaction but used a different method. When I reviewed the documents, there's no such disclaimer that the DOE used a different method. So, all along in our minds the transaction went through the normal process of DC 2007," the senator said.

Gatchalian sought clarification from Cusi during the budget hearing as he dug up the statements given by DOE officials to the Senate Energy Committee hearing in November 2020 affirming that the transaction between Udenna and Chevron requires prior approval of the DOE as stated under Section 11 of PD 87.

Positions aired by the DOE through then Assistant Secretary Leonido Pulido and subsequent submissions by the department to the Senate stated that the transfer of interest in the Malampaya gas field project must be approved by the department before it becomes binding and effective.

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Pag-apruba ng DOE sa Chevron-Udenna Malampaya deal depektibo - Gatchalian

Nanindigan si Senador Win Gatchalian na base sa mga ebidensyang nakalap ng Senado, depektibo at hindi wasto ang ginawang pag apruba ng Department of Energy (DOE) sa pagbenta ng 45% stake ng Chevron Malampaya sa Malampaya gas project sa Udenna group ni Dennis Uy.

"Sa aking opinyon, depektibo itong approval. Samakatuwid, hindi wasto ang pagsang-ayon ng DOE dito sa transaksyon dala ng maraming pabago-bago o magkakasalungat na pahayag. At para sa isang malaking transaksyong kagaya nito, dapat walang kalituhan. Sa halip na makapagbigay liwanag sa isyu, mas lalo kaming naguluhan sa naging pag-amin ng DOE na sila mismo ay nalito nang kanila itong suriin," ani Gatchalian.

Ang pahayag na ito ng senador na ginawa sa pinakahuling pagdinig ng 2022 budget ng DOE ay matapos mapag-alaman mula kay Energy Secretary Alfonso Cusi na hindi kailangan ng bendisyon ng gobyerno ang paglipat ng shares ng Chevron sa UC Malampaya Philippines Pte Ltd. na pag-aari ng Udenna matapos itong isailalim sa pagsusuri base sa tinatawag nilang farm-in arrangement.

"Wala sa anumang dokumentong isinumite ng DOE na naging pamantayan ang argumentong farm-in rule. Simula pa noon, ang mga naunang mga pahayag ay kailangang aprubahan ito ng gobyerno batay sa prosesong nakalatag sa PD 87 at DC 2007," giit ni Gatchalian.

Ang tinutukoy ng senador ay ang DOE Department Circular 2007-04-003 na naglalaman ng mga panuntunan at paraan na dapat sundin sa paglilipat ng rights and obligations sa mga petroleum service contracts na nakapaloob sa ilalim ng Presidential Decree 87.

"May mga naging pahayag ang DOE na hindi nila kailangang suriin at aprubahan ito ngunit ngayon ay inamin nila na inaprubahan nila ito noon gamit ang ibang pamamaraan. Nung binalikan ko ang mga dokumentong galing sa kanila, walang pagpapatunay sa sinasabi nilang gumamit ng ibang pamamaraan ang ahensiya sa pag-apruba ng naturang transaksiyon. Sa pagkakaalam namin, dumaan ito sa normal na proseso batay sa DC 2007," sabi ng senador.

Hiningi ni Gatchalian ang paliwanag ni Cusi sa pagdinig ng budget ng DOE dahil sa nakalap ng Senate Energy Committee mula sa mga opisyal ng departamento noong Nobyembre 2020 kung saan sinabi nila na ang transaksyon ng Udenna at Chevron ay kailangang sang-ayunan ng DOE bago ito isapinal gaya ng nakasaad sa Section 11 ng PD 87.

Ito ang naging pahayag noon ni DOE Assistant Secretary Leonido Pulido na sinuportahan ng mga dokumentong isinumite ng ahensya sa Senado na nagsasabing ang paglipat ng shares ng mga nagmamay-ari sa Malampaya gas project ay kailangan ng pahintulot ng DOE bago isapinal ito.

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