Shell has agreed to sell its 45% stake in the Malampaya gas field in the Philippines to its partner Malampaya Energy XP (part of Udenna Corporation). The group has signed an agreement to divest its 100% interest in Shell Philippines Exploration (SPEX), which holds a 45% operating interest in the Service Contract 38 (SC38) including the producing Malampaya gas field for US$380m, with additional payments of up ot US$800m between 2024, contingent on asset performance and commodity prices. The transaction is expected to be completed by the end of 2021.
Udenna already owns a 45% stake in SC38 that it acquired in 2020 from Chevron and will raise its share to 90%, with the remaining 10% owned by the Philippine National Oil Company Exploration Corporation. Located in the South China Sea, the Malampaya natural gas project started producing gas in 2002 and now accounts for a large part of the Philippines' gas supply. It supplies gas to five power plants in Luzon island, with a combined capacity of 3.2 GW. The field is expected to be depleted within the next decade and the service contract covering the project will expire in 2024. However, partners are seeking to further develop it and have requested a contract extension.