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
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.
The Malampaya offshore gas field is located in Palawan province, in an area of the South China Sea not claimed by Beijing. It fuels power plants that deliver about a fifth of the Philippines’ electricity requirements. In December, Uy’s Udenna said Malampaya may operate for several more years beyond its projected 2027 project life.
Razon, with a net worth of US$6.7 billion according to Forbes, is “an expert in thriving in highly-regulated businesses”, a banker, who was not authorised to speak to the media, told Reuters.
The 62-year-old’s major holdings include casino-resort group Bloomberry, global port operator International Container Terminal Services and utility Manila Water.