South China Sea: Philippine tycoon and Duterte ally Enrique Razon to buy majority stake in gas field

Tycoon will have a controlling stake in the Malampaya offshore gas field, which fuels power plants delivering about one-fifth of The Philippines’ electricity

Billionaire Enrique Razon is a close ally of outgoing President Rodrigo Duterte and his business empire has expanded rapidly under the country’s leader

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Enrique Razon Jnr is acquiring a majority stake in the South China Sea gas field Malampaya. Photo: Reuters

Published: 6:51pm, 3 Jun 2022Updated: 9:36pm, 3 Jun 2022

Philippine ports and gaming tycoon Enrique Razon is acquiring a majority stake in a South China Sea gas field from a close ally of outgoing President Rodrigo Duterte, a move seen as benefiting his oil exploration franchise on the Reed Bank.

Razon’s Prime Infra Holdings said in a statement on Thursday it will buy a controlling stake in the Malampaya gas-to-power project from Dennis Uy’s Udenna Corp for an undisclosed amount, the latest in a string of corporate deals by Razon, the Philippines’ second richest man.

Razon’s plan was first reported by Reuters in May when it revealed that Uy, whose business empire expanded rapidly under Duterte, was looking to sell businesses collectively worth several billion dollars, including the Malampaya gas field, to pay down debt. Uy had acquired a combined 90 per cent share in the Malampaya gas field from Chevron and Shell for roughly US$1 billion.

Prime Infra did not say how much stake it was buying. The deal needs to be approved by the Philippines’ Department of Energy (DOE) and state-owned Philippine National Oil Co-Exploration Corp (PNOC-EC), which owns 10 per cent of Malampaya. Both agencies did not respond to requests for comment.

Udenna declined to give more details about the deal, but in the same statement, Uy said he looked forward to partnering with Razon to sustain Malampaya’s operations and meet the urgent need for energy security.

The deal is beneficial for both Razon and Uy, an analyst and a banker said. “Amid a rising interest rate environment, debt reduction is a must for Uy, hence the asset sale,” Carlos Temporal, research analyst at AP Securities in Manila, told Reuters.

Temporal said the controlling stake would give Razon control over Malampaya’s processing plant and pipeline, increasing the viability of his oil and gas exploration franchise in the Reed Bank, which the DOE previously said contained bigger natural gas reserves than Malampaya.