Royal Dutch Shell has agreed to sell its interest in an offshore gas field in the Philippines for USD460 million to limit its oil and gas activities.
Shell has sold its 45 per cent stake in Service Contract 38 (SC38), a deep-water licence that includes the operation of the Malampaya gas field to a subsidiary of the Udenna Group, which owned a 45 per cent stake in the project. The remaining 10 per cent will be held by the state-owned Philippine National Oil Company (PNOC). The base valuation for the sale is USD380 million, with potential payments of up to USD80 million to be made between 2022 and 2024, depending on prices of the commodity and asset performance. The transaction is expected to be completed by the end of 2021.
The Malampaya gas field currently provides fuel to power stations that supply around a fifth of the Philippines’ electricity needs. Its output has been falling, and it is expected that reserves will be depleted by 2027.