The Department of Energy has approved Prime Infrastructure Capital Inc.'s acquisition of the 45 percent controlling stakes of Shell Philippines Exploration B.V. in the Malampaya deep water gas-to-power project, the country's only natural gas facility.

"The DoE's approval is conditioned on SPEX remaining to be a subsidiary of Prime Infra, and on the continuing validity of Prime Infra's commitments and undertakings to the DoE in respect of SPEX's obligations as operator of Malampaya Service Contract 38," the DoE said in a press statement.

The PNOC-EC Board had previously given PNOC-EC consent to the sale as a member of the consortium. In deference to the completion of the DoE's review, PNOC-EC withheld announcing its Board's decision dated 22 September.

According to the DoE, Prime Infra, owned and controlled by gaming tycoon Enrique K. Razon Jr., was found to be "technically, financially and legally qualified as a transferee and as successor to Shell as operator of the Malampaya."

In a separate statement, Prime Infra said the approval of the transaction "marks the initial foray of Enrique K. Razon Jr.'s infrastructure arm into the upstream energy market."

"We welcome DoE's thorough review and subsequent approval of the SPEX sale given the urgency to sustain the operations of Malampaya — a vital energy installation and symbol of national pride — and to plan for the further development of the existing reserves in light of the current power undersupply" Razon, chairperson of Prime Infra, said.

Prime full ownership set

Prime Infra will assume full ownership and control of SPEX once the transition process for the handover of operations from Shell is completed by November.

"Prime Infra's energy portfolio has always been aligned with the national government's objective towards attaining energy independence and security while reducing the country's reliance on fossil fuel," Prime Infra president and CEO Guillaume Lucci.

The Malampaya project is one of the country's most important power assets, as it produces natural gas for power plants in Batangas City that power up to 20 percent of Luzon's total electricity requirements.

It began operations in 2001, with the consortium's license for the project set to expire in 2024.

Respected panel

In August, the DoE formed an advisory panel to guide the Department of Energy in crafting sound and legal policy recommendations for the power sector.

The Law and Energy Advisory Panel will focus on advising the DoE on various energy-related reform initiatives and legal matters, including the promotion of indigenous as well as low-carbon sources.

The proposed initial discussions will cover legal issues involving the country's upstream oil and gas sector in general, including the country's biggest gas-to-power initiative to date — the Malampaya-Camago project.

The panel is headed by Senior Legal Advisors from the private sector including Retired Chief Justice Artemio V. Panganiban and Retired Chief Justice Reynato S. Puno.

Lotilla said the former chief justices have agreed to be the co-chairs of the DoE's Law and Energy Advisory Panel. They will serve as private citizens and will not assume any public office.