DOE asked to explain approval of Udenna’s acquisition of Chevron’s Malampaya stake

Robie de Guzman   •   April 16, 2021   •   306

 

MANILA, Philippines —  Senator Sherwin Gatchalian on Friday called on the Department of Energy (DOE) to explain its decision to allow the transfer of Chevron Philippines’ stake in Malampaya to Udenna Corporation Malampaya Philippines, stressing its responsibility to inform power consumers of the consequences of the merger.

Gatchalian was referring to Udenna’s acquisition of Chevron Philippines’ 45-percent ownership in Malampaya LCC starting last year.

In a statement, the senator recalled that in a Senate hearing in November 2020, the DOE’s legal department told the energy committee that such transaction is governed by a DOE circular requiring an evaluation of the technical, legal, and financial capacity of the company.

He also cited Presidential Decree 87 which likewise requires the approval of the DOE on such transfer of shares in upstream petroleum ventures.

Also, in the joint operating agreement signed by the members of the consortium operating Malampaya (Shell, Chevron, and PNOC-EC), Gatchalian noted the provision which states that for the sale of shares to be finalized, the party or the transferer has to ensure that they get all prior permits or approvals from the government.

“UC Malampaya Philippines completed on March 11, 2020 its acquisition of Chevron Malampaya LLC, the holder of a 45% interest in Malampaya gas field project, and it was only on October 28 last year that the DOE has been officially provided with the documents on the Malampaya share’s divestment,” said Gatchalian, who chairs the Senate Committee on Energy.

“Prior to the DOE announcement on their approval of the sale, it is worthy to note that the Senate Energy Committee has sought the department’s submission of its legal basis in reviewing the transaction, whether there is a need for another issuance to clarify if these kinds of transactions would need executive approval or not, and their recommendations to the legislature on possible amendments on PD 87,” he added.

The senator stressed that there is a need for an explanation from the DOE’s end on how they could justify their approval of the transaction.

“This involves not just an ordinary asset. It demands a lot of experience, technology, and global connections. The oil and gas industry is a global business. The technical know-how is also required and this is because we’re looking at the larger picture which is the energy security of the country,” he said.

“The consumers are the primordial concern. We want to make sure that the consumers will receive 24/7 electricity at a least-cost manner,” he added.

Gatchalian also emphasized that the country has existing laws and regulations that govern all of these transactions, and that “those laws are meant to create a stable environment in the power sector.”

DOE, ERC urged to probe unplanned outages in some Luzon power plants

Robie de Guzman   •   April 22, 2021

MANILA, Philippines — Senator Sherwin Gatchalian on Thursday called on the Department of Energy (DOE) and the Energy Regulatory Commission (ERC) to look into the reported unplanned outages of some power plants in Luzon that allegedly triggered a spike in consumers’ electricity bills.

Citing data from the Independent Energy Market Operator of the Philippines (IEMOP), Gatchalian said that for the March 2021 billing period, there were 1,580 megawatts (MW) non-coincidental unplanned outages or 61.3% of the total outages.

For the April 2021 billing period but only until April 18, there were 1,428 MW non-coincidental unplanned outages or 62.8% of the total outages, he added.

“Dapat gumalaw dito ang ERC dahil noong November 2020 last year, naglabas sila ng isang polisiya na lahat ng planta ay dapat makapag-deliver batay sa tinatawag na reliability index,” Gatchalian said in a statement.

“Kapag bumagsak sila doon sa polisiya ng ERC at hindi nila ma-justify kung bakit pumalya yung planta, magmumulta sila,” he added.

Gatchalian, who chairs the Senate Committee on Energy, also urged the DOE to address any logistical issues being faced y some power producers to prevent similar occurences in the coming weeks as the government plans to intensify its COVID-19 vaccination between May and June.

“Hindi dapat tayo magkaroon ng brownouts dahil padating pa ang mga bakuna natin by the end of this month, May, or June at maseselan itong mga vaccines. May iba na kailangan ng almost subzero freezing temperature o mga freezer na kaya ang negative 20 degrees. Kaya kung may brownout tayo, saan natin ilalagay ang mga bakuna natin? Malaking dagok ‘yan sa atin at maaantala ‘yung vaccination process natin,” he said.

The DOE should also address problems in the delivery of spare parts needed by power plants to prevent simultaneous outages, Gatchalian said.

“Dapat ring imbestigahan ng DOE ang ilang alegasyon tungkol sa logistics. Dahil nga pandemya ngayon, hindi dumarating yung mga spare parts, kaya nagkaka-problema sa logistics. Dapat magawan agad ito ng aksyon para hindi sabay-sabay na bumagsak ang mga planta,” he said.

“Dapat gawin ng pamahalaan ang lahat ng makakaya para maiwasan ang brownout. Kaya ang solusyon dito at all cost – dapat yung mga planta huwag bumagsak, huwag silang mag outage.” he added.

PH Energy dep’t. vows to protect petroleum resources in West Philippine Sea

Robie de Guzman   •   April 22, 2021

MANILA, Philippines – The Department of Energy (DOE) vowed to take necessary steps to assert the Philippines’ rights over petroleum and other resources in the West Philippine Sea should any foreign state engage in petroleum activities within the area.

Energy Secretary Alfonso Cusi issued the statement after President Rodrigo Duterte said in his public address on Monday that he would send the country’s warships to the West Philippine Sea once the country starts drilling for oil and other resources in the seabed of the region.

“The Department of Energy (DOE) stands firmly behind any decision and action of President Rodrigo Roa Duterte regarding the assertion of the exclusive licensing authority of the Philippines over petroleum and other resources in the seabed and subsoil of the West Philippine Sea,” he said.

Cusi said the DOE supports the President’s statements regarding the defense of the resources of the Philippine seabed and subsoil as this s in accordance with the Philippine laws.

“Under our laws, only the Philippine government, through the DOE, may issue licenses to drill in Philippine land territory, including its islands, internal waters, territorial sea, exclusive economic zone (EEZ), and continental shelf,” he said.

“Should any foreign state engage in petroleum activities inside the Philippine petroleum jurisdiction, the DOE shall take the necessary steps to protect our licensees and preserve our resources,” he added.

“It shall defer to the sole prerogative of the President regarding any security option. It shall also conform to any decision that the Department of Foreign Affairs might take regarding the ongoing informal negotiations on oil and gas cooperation with China.”

Tensions between the Philippines and China in the West Philippine Sea surfaced anew due to the lingering presence of Chinese vessels in waters within the Philippines’ Exclusive Economic Zone (EEZ).

The Department of National Defense has called for the immediate removal of these vessels while the Department of Foreign Affairs filed a series of diplomatic protests over the issue.

“Meanwhile, the DOE continues to develop the uncontested Philippine EEZ and continental shelf through the resumption of petroleum operations by our licensees and the award of new petroleum areas,” the department said.

“The Philippines remains in business, COVID-19 and China, notwithstanding,” it added.

DOE chief Cusi invites US firms to invest in PH energy development

Robie de Guzman   •   April 16, 2021

MANILA, Philippines – Department of Energy (DOE) Secretary Alfonso Cusi has called on the American business community to look into opportunities in the Philippine energy sector, particularly in renewable energy, as the country continues to seek the accelerated attainment of a secure and sustainable energy future.

Speaking at the Virtual Economic Briefing organized by the Philippine Embassy in Washington D.C. on Thursday, the Energy chief gave a brief rundown on the country’s energy landscape, including potential areas for enhanced bilateral energy cooperation.

“We are doing all we can to ensure that the country’s current energy requirements are met without compromising the ability of future generations to secure theirs,” he said.

Cusi, however, noted that US investments, especially in the area of energy and power generation, have dwindled in the past years.

“It is unfortunate that the US seems to have forgotten us, so I hope our American friends in the business community will again take a look at our new initiatives that aim to make the Philippines rife with many investment opportunities,” he said.

Given the urgency of establishing a sustainable global energy future, Cusi said the DOE is encouraging the further development and utilization of renewable energy without the Feed-In-Tariff (FiT) subsidies.

He said the government stopped the implementation of FiT because it “proved to be a big mistake.”

“It forced electricity prices in the country upwards. We cannot have our consumers shoulder the financial burden of such subsidies any longer. This holds true most especially since RE technologies and their markets’ competitiveness have significantly progressed in the past decade,” the DOE chief explained.

When asked which particular area of renewable energy he would like to see more private sector participation, Cusi cited the development of the country’s geothermal sector.

“Geothermal energy is an area that we would really like to tap and develop. That’s the kind of power we need, and we’d like to see investors from the US doing a 100% participation in the development of our geothermal energy,” he said.

The DOE chief also took the opportunity to brief the US investors on the updated Philippine Energy Plan or PEP for 2018-2040, which contains the necessary adjustments undertaken by the government in light of recent global developments, including the COVID-19 pandemic.

“By 2040, we envision that the Philippines would have a reliable and sustainable energy supply that will foster a balance between economic growth and the protection of the environment. Investments would be key to transforming this vision into a reality,” he said.

Cusi also mentioned other programs that the US business community may be interested to invest in, such as the Green Energy Option Program (GEOP), where clean energy advocates can source their clean power requirements through our Retail Electricity Suppliers (RES); the Green Energy Auction Program (GEAP), which provides an additional market for RE Developers with the end view of accelerating greater entry of renewables in the power industry; and the Philippine Conventional Energy Contracting Program (PCECP) that facilitates the exploration and development of the country’s indigenous resources and revitalize the upstream oil and gas sector.

There may also be investment opportunities in the future in the areas of nuclear energy and hydrogen, he added.

“The Philippines is ready to embrace the New Normal. We have been preparing for it and we are now steadily reopening our economy to recover from the effects of the COVID-19 pandemic,” he said.

The virtual economic briefing, held to celebrate the 75 years of PH-US bilateral relations, brought together PH and US government officials and private sector representatives to chart the way forward for two-way trade and investments in the context of both countries’ pandemic response and recovery plans.

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