Energy Economy

25 Sep 2020

Shell Looks to Sell off Stake in Philippines Gas Field

25 Sep 2020  by Samuel Good   

Shell is looking to sell its 45pc stake in the Philippines' Malampaya gas field, almost a year after fellow major Chevron sold off its own stake in the field.

The right to extract gas from the Malampaya concession is scheduled to end in 2024, but output is expected to begin to slow from 2022, the country's energy department said earlier this month, following resource depletion over recent years. But production could continue until 2027, it added.

Shell, which is also an operator of Malampaya, is exploring divestment options for its stake in the field "as part of an ongoing portfolio rationalisation", the firm said.

Chevron sold its 45pc stake in the gas field in late 2019 to domestic firm Udenna, which controls Phoenix Petroleum, finalising the deal in the first quarter of this year. Udenna sold part of this equity to the third equity holder in Malampaya — state-owned Philippines National Oil — which now controls around 15pc in the project.

Malampaya supplies the Philippines' five gas-fired power stations — with a combined 3.2GW capacity — under term supply agreements that are set to expire in 2022-24. All five are located on Luzon Island, where the capital Manila is situated.

And with no other domestic supply currently available to replace the Malampaya volumes, despite a number of prospective new basins, the country is turning to gas supply from the international LNG market. Four import projects are currently planned, with expected start-up dates from the first quarter of next year to the first quarter of 2025, the energy department said. Around 5mn t/yr would initially be required to meet power and other gas demand on Luzon Island, it added.

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