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UPDATE 1-Shell looking to sell stake in Philippines' Malampaya gas project

Thu, 24th Sep 2020 12:23

* Project delivers 20% of country's power needs

* Shell has launched major cost-cutting drive

* Malampaya gas field seen running dry by 2027
(Adds energy minister's comment, background)

MANILA, Sept 24 (Reuters) - Royal Dutch Shell PLC
is looking to sell its 45% stake in the Malampaya gas-to-power
project in the Philippines, a key power source for the country's
main island of Luzon, its local unit said on Thursday.

"As part of an ongoing portfolio rationalisation to simplify
and increase the resilience of its business, Shell is exploring
its options with a view to divest its interest" in Malampaya, a
spokeswoman told Reuters.

"Shell would ensure a smooth transition of the asset to a
credible buyer who would be well placed to optimise the value
from Malampaya," the spokeswoman said in response to emailed
questions, without naming any potential buyers.

In what it called a "strategic" move to secure the long-term
sustainability of its business amid the COVID-19 pandemic, local
unit Pilipinas Shell Petroleum Corp last month
decided to permanently shut down its refinery.

The decision comes as Shell is looking to slash up to 40%
off the cost of producing oil and gas in a major drive to save
cash so it can overhaul its business and focus more on renewable
energy and power markets, sources told Reuters.

Malampaya's natural gas, discovered in 1991 by Shell, fuels
four power plants that deliver about a fifth of the country's
electricity requirements.

The divestment plan also comes about a year after Chevron
agreed to sell its 45% interest in the project to
Philippine oil and shipping group Udenna Corp.

The remaining 10% interest in the Malampaya project is held
by state-owned Philippine National Oil Company.

Energy Secretary Alfonso Cusi said: "I'm not aware of who
they (Shell) are negotiating with. What I know is they are
looking for a buyer."

Malampaya's gas supply is expected to run dry by 2027, based
on the latest projection of the Department of Energy, which is
looking at imported liquefied natural gas as a replacement.

(Reporting by Enrico Dela Cruz; Editing by Martin Petty,
Kirsten Donovan)

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