* Udenna to buy Shell's 45% stake in Malampaya gas field
* Udenna to own 90% of Malampaya, Philippines' PNOC has 10%
(Adds ownership structure of Malampaya gas field, background)
LONDON, May 20 (Reuters) - Royal Dutch Shell has
agreed to sell its stake in an offshore gas field in the
Philippines for $460 million as part of its strategy to narrow
its oil and gas operations.
Shell sold its 45% stake in Service Contract 38 (SC38), a
deep water licence which includes the producing Malampaya gas
field, to a subsidiary of the Udenna Group which already holds a
45% stake in the project.
The base consideration for the sale is $380 million, with
additional payments of up to $80 million between 2022 to 2024
contingent on asset performance and commodity prices, Shell said
in a statement.
The deal is due to complete by the end of 2021.
Wael Sawan, Shell's head of oil and gas production, said the
deal "is consistent with Shell's efforts to shift our Upstream
portfolio to one that is focused on nine core positions."
The Philippines' Malampaya gas field, discovered in 1991,
currently supplies fuel to power plants that deliver about a
fifth of the country's electricity requirements, based on energy
ministry data.
Malampaya's output is declining, with the Philippines'
energy ministry expecting it to run dry by 2027.
Philippine conglomerate Udenna, run by local tycoon Dennis
Uy who has close ties with Philippine President Rodrigo Duterte,
will double its interest in Malampaya, having bought the first
45% stake from Chevron in 2019 for $565 million.
State-owned Philippine National Oil Company (PNOC) holds the
remaining 10%.
Udenna had expressed an interest in buying Shell's stake
last year, when company spokesman Raymond Zorrilla described
Malampaya as "a high-quality asset strategic to the future
welfare and energy security of the country."
Aside from gas reserves, Malampaya's assets include undersea
pipelines and other facilities that could be tapped by future
sellers and users of imported liquefied natural gas.
The Philippines will need to import LNG before Malampaya
runs dry. The government has approved several LNG import
terminal projects near the Malampaya platform.
(Reporting by Ron Bousso; additional reporting by Enrico Dela
Cruz in Manila; Editing by Simon Cameron-Moore and Jane
Merriman)
