Chevron agrees to sell Philippine gas field: Correction

Corrects reference to PXP ownership in fifth paragraph

Chevron has agreed to sell its 45pc stake in the Philippines' offshore Malampaya gas and condensate field, further scaling back its presence in southeast Asia.

Chevron is selling its stake to domestic conglomerate Udenna. It declined to give any further details including the value of the deal, which is yet to close.

Malampaya, the sole fuel source for the Philippines' gas-fired power plants, was valued at $2bn when it came on line in 2002 but reserves are depleting rapidly and are on course to be nearly exhausted by 2024.

The field in the South China Sea is operated by Shell with a 45pc stake, with the remaining 10pc held by the Philippines' state-owned PNOC. Production peaked at 429mn ft³/d (4.4bn m³/yr) of natural gas and 15,000 b/d of condensate, although current output is unclear.

Separately, Philippine upstream firm PXP Energy this week submitted a proposal to the government for an integrated gas hub at Malampaya. PXP plans to set up an infrastructure and distribution network spanning Malampaya and the nearby Sampaguita field and other prospects in service contract 72, which it took control of in 2017 through its purchase of UK-listed Forum Energy.

The Sampaguita field is located on the Reed bank, one of the areas of the South China Sea that is also claimed by China under its nine-dash territorial line. The territorial disputes have stalled development of the field, although relations between Manila and Beijing have warmed in recent years under Philippine President Rodrigo Duterte and the two governments have discussed setting up a joint venture to develop Reed bank gas.

The depletion of the Malampaya field has also sparked a rush of planned LNG import projects in the Philippines.

Chevron, like other oil majors, has been cutting its upstream presence in Asia-Pacific to focus on more attractive prospects elsewhere. The company will exit the Rokan block in Indonesia when its production-sharing contract expires in 2021. It will hand control of Thailand's two biggest gas blocks — Erawan and Bongkot — to the country's state-controlled PTTEP in 2022 and 2023 respectively.

Chevron plans to sell $5bn-10bn of assets in 2018-20, with divestment proceeds already at the lower end of the target range. The latest deal to close was the $2bn sale of its UK central North Sea business to Israeli energy firm Delek last week. Chevron agreed last week to sell its interests in Azerbaijan's Azeri-Chirag-Gunashli oil field and the Baku-Tbilisi-Ceyhan pipeline to Hungary's Mol for $1.6bn.

By Kevin Foster