Royal Dutch Shell has finalised an agreement to divest its stake in Malampaya gas field in the Philippines to Malampaya Energy XP for up to $460m.

Malampaya Energy XP, which is a subsidiary of Udenna, will acquire a stake in Shell Philippines Exploration (SPEX) from Shell subsidiary Shell Petroleum.

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SPEX owns a 45% stake in Service Contract 38 (SC38), a deepwater licence that comprises the Malampaya gas field.

Shell upstream director Wael Sawan said: “Since it began commercial operations in 2002, Malampaya has supplied a significant portion of the Philippines’ energy demand and it will continue powering the country with indigenous gas following a safe transition of the asset and its experienced workforce.”

Sawan said that the sale is in line with the company’s plan to align its upstream portfolio to nine core positions.

Under the deal, Shell will get a base consideration of $380m. It will also receive contingent payments of up to $80m, based on asset performance and commodity prices, between 2022 to 2024.

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Udenna chairman and CEO Dennis A Uy said: “We are tremendously proud of Malampaya Energy for acquiring one of Shell’s most successful natural gas assets in Asia, which of course includes the world-class SPEX team currently operating Malampaya.”

The deal, which is subject to partner and regulatory consent, is planned to be closed by the end of the year.

Other SC38 license partners include UC38, a subsidiary of Udenna, with a stake of 45% and Philippine National Oil Company Exploration Corporation (PNOC) holding 10% stake.

The Malampaya project’s main components are subsea wells and flowlines, a shallow water platform and a depletion completion platform for gas processing, a 504km long gas export pipeline on the seabed, an onshore gas plant, and a pipeline in Batangas City.